The Talk Show

180: ‘Yay or Nay to Their POV’ With Matthew Panzarino


00:00:00   Matthew Panzareno welcome welcome back to the show. Thank you sir. Thanks for having me. Wow. It's a tough week to have a show. There's no news

00:00:07   Yeah, we might as well just shut it down go on vacation

00:00:14   Man yeah, it's been like that every day so

00:00:20   We are recording on Tuesday the 31st. So we are literally talking like two hours after Apple posted

00:00:28   Quarterly results so we can actually do like a news show. It's like we're like on on CNN or something talking about breaking news

00:00:35   Right this week's news today or whatever. Yeah, so that yesterday

00:00:40   Summarizing the quarterly results, I think it's my summary is more or less

00:00:50   iPhone went back to growth which was contrary to

00:00:55   Some predictions that that that last year's dip was was the sign that that we'd reached a peak iPhone

00:01:03   People say they sold more iPhones last quarter than they've ever sold in any quarter including the two year ago one when the sales went

00:01:10   bananas because of the

00:01:12   iPhone 6 and 6 plus

00:01:14   iPad sales are down a little bit year over year, but they're

00:01:20   reasonably saying, well, last year they came out

00:01:23   with the brand new iPad Pro.

00:01:24   This year there were no new iPads in the holiday quarter,

00:01:26   and they're still a respectable 13 million.

00:01:29   Mac sales were up a little, rebounding,

00:01:33   I think showing good signs of probably

00:01:36   the new MacBook Pro sales being pretty good.

00:01:39   Apple Watch, they don't break those out,

00:01:42   but on the conference call, it sounded to me,

00:01:45   reading the summary, that they said

00:01:47   it was a record-breaking quarter.

00:01:50   And that makes sense because it's the holiday quarter

00:01:52   and I think that it's,

00:01:54   if they did break those watch sales out,

00:01:56   I think the holiday quarter is gonna be a huge spike,

00:01:59   just like in the old days, the way iPods were.

00:02:02   And then last but not least, services,

00:02:04   Apple's favorite word of the last two years is up.

00:02:07   Is that a fair summary?

00:02:10   - Yeah, I think so.

00:02:12   I mean, I think there's some question

00:02:13   about that other category,

00:02:15   in like the overall other category.

00:02:18   There was a dip in growth, but the general consensus

00:02:22   is the watch did fine in the quarter.

00:02:24   - Right.

00:02:26   - I mean, it's pretty much the only watch

00:02:27   that's doing anywhere near decent right now,

00:02:29   so it's not too hard to say that.

00:02:33   - Yeah, and it seems to me like, I mean, there's a lot of,

00:02:37   I mean, this is a little off topic of Apple's quarter,

00:02:39   but it's on point with the watch that I'm starting to see

00:02:43   some serious repeated pessimism about Fitbit,

00:02:48   that Fitbit, I think, might be,

00:02:51   as a company, might be in trouble.

00:02:53   - Yes, yeah, I think that's pretty clear

00:02:55   from what we've been hearing so far.

00:02:58   I think that there's a significant change in direction,

00:03:01   what we refer to here in Silicon Valley as pivot,

00:03:05   coming for them, but yeah, there's,

00:03:08   they are definitely, and I don't think anybody

00:03:10   really thinks that it's completely about the products.

00:03:14   I mean, I think there's plenty of quality issues

00:03:15   they've had over the years,

00:03:16   and they've never been super highly rated

00:03:21   as far as durability and longevity and quality.

00:03:24   And they've had a couple of actual real problems

00:03:26   with quality, but I think it's just a tough category

00:03:29   and they just didn't quite figure it out.

00:03:32   - Yeah, it's like they stand alone

00:03:37   as the only independent company

00:03:41   that's making fitness trackers

00:03:43   that is worth even talking about,

00:03:45   but it doesn't seem like they've got it over the hump.

00:03:48   And it's, I think in particular, Apple Watch is doing them in

00:03:52   that in this casual market, in this casual market

00:03:56   of people who wanna spend like, let's say,

00:03:58   somewhere around two, $300 to track their fitness,

00:04:02   it seems to me like Apple Watch is starting to get

00:04:05   real traction outside the early adopters market,

00:04:09   and I think it's at Fitbit's expense.

00:04:13   yeah and it's sort of the

00:04:16   you know you bought a phone

00:04:18   may used to be a main made for four five years ago you bought a phone make phone

00:04:21   calls and maybe you write text messages

00:04:24   and you got all these apps with it

00:04:25   you know i know it's not a stop and then you come to love that and

00:04:28   pretty soon you're not making phone calls at all you texting everybody with

00:04:31   you know messenger or whatever

00:04:33   but i think it's the same kind of concept you know so people are saying

00:04:35   hey you know now the price is getting to where

00:04:39   i don't mind spending two hundred box

00:04:41   getting this thing and getting all these other things with it but it's a great

00:04:44   you know so solid fitness tracker that they can do all these things so

00:04:48   as a category and union as you mentioned it

00:04:51   you knows treading alone on the backs of that

00:04:54   one p_m_l_ right

00:04:55   right so if you break out the apple watch is a business especially that

00:04:58   first launch quarter when it launched

00:05:01   i mean that stuff takes ramp time

00:05:04   and when it's you're relying on yourself in your own revenues and whatever you

00:05:07   know venture capital obviously you have

00:05:09   you don't have

00:05:10   infinite runway, you know?

00:05:13   - Yeah, and I think, we'll come back to this

00:05:16   on another topic in a bit, but I'm as guilty of it,

00:05:21   maybe not as anybody, but I know I'm guilty of it,

00:05:26   and I think others who write about technology

00:05:28   are seriously guilty of being too focused on the short term

00:05:33   and not realizing how long some things need

00:05:40   to really get mainstream acceptance.

00:05:42   Like just smartphones, period.

00:05:45   It was like, remember the, what was the initial goal?

00:05:48   It was like 10 million iPhones in the first year of sales,

00:05:52   something like that.

00:05:53   And they made it, but it's like if you think about that now,

00:05:59   they sold 78 million phones in three months

00:06:03   this last quarter.

00:06:04   And whereas back when it first came out 10 years ago,

00:06:08   It was, we're hoping for 10 million in 12 months.

00:06:12   It takes a long time.

00:06:14   And a part of it is just the simple common sense,

00:06:16   and I mean, other people have written about it,

00:06:18   but just, there are people like me

00:06:21   who will go and buy an iPhone on the day it comes out.

00:06:24   But most people, even if they were curious,

00:06:26   and I still remember it with the original iPhone,

00:06:28   where people on the street would see me using it,

00:06:30   and they would say, without knowing who I am,

00:06:33   they would just say, "Is that an iPhone?"

00:06:35   Right?

00:06:36   And they were obviously aware of it.

00:06:38   They probably have one now,

00:06:39   but it took years for them to be comfortable to say,

00:06:42   "Okay, I'll get one."

00:06:43   'Cause there's like a comfort factor of knowing it.

00:06:46   And I think the watch is on that trajectory.

00:06:49   - Yeah, I think so.

00:06:53   I mean, I think I've definitely had,

00:06:54   right now it's exited that phase for me.

00:06:59   It's not like people see it on my wrist and go,

00:07:02   oh my God, is that an Apple Watch?

00:07:03   But what they do say is,

00:07:05   "Oh, you know, I'm thinking about getting it. Are you still using it?"

00:07:08   Which is an interesting way to phrase it, right? And I think that that's

00:07:11   partially from the narrative, you know,

00:07:15   I guess you could call it media narrative or whatever,

00:07:19   that the watch isn't all that useful long-term, that there's an initial

00:07:23   wave of like, "Oh hey, I'm poking around," and then eventually you get tired of it and put it away.

00:07:27   And I definitely know that

00:07:29   there are plenty of people that don't wear those anymore or whatever, right? There's

00:07:32   going to be that with any gadget. It doesn't fit

00:07:34   either what the company tried to sell you it was, or whatever their success or failure

00:07:41   in communicating what it was was, or your own vision of how it would fit into your life

00:07:45   didn't quite match up with how it actually did.

00:07:49   So I think that we've exited that phase, and now we're in a phase where the people that

00:07:54   are still wearing it are advocating in ways that are more specific.

00:07:57   They're like, "Yes, I love it because X, Y."

00:08:00   It's not like, "Oh yeah, I love it."

00:08:03   And then like, "What do you like about it?"

00:08:04   "Oh, I look at all these things and this thing and that thing."

00:08:06   I don't think we're out of that.

00:08:09   These are the practical benefits it offers me.

00:08:11   "Oh yeah, I have all my calendar stuff on there."

00:08:14   That's enough for most people.

00:08:15   Or it's a great fitness tracker.

00:08:17   I go to the gym every day or I cycle or I swim, etc.

00:08:22   People are figuring out the things that work for them.

00:08:25   And so it's more about the precise benefits on an individual basis versus the entire bolus

00:08:34   of benefits that could theoretically apply to you.

00:08:38   And I think that that could be where the sustained growth

00:08:42   is coming from versus the initial wave of who knows.

00:08:44   - Yeah, it's also true that, I mean, we knew this.

00:08:47   This isn't something we needed to hear from Tim Cook

00:08:50   on the conference call today.

00:08:51   You could tell just by going to the Apple store

00:08:53   and trying to buy an Apple Watch that they were backordered

00:08:57   for most of the last quarter, or still are, I think,

00:09:01   that they couldn't make them fast enough,

00:09:03   Which is a good sign, I guess.

00:09:05   - Yeah, I mean, I think initially, you know,

00:09:09   you never know whether they just didn't know

00:09:11   how many to make or what, or whether they didn't know

00:09:13   what the right mix was.

00:09:15   - Right.

00:09:16   - I think initially there was a lot more people

00:09:17   buying steel than maybe they thought.

00:09:20   And so there was, you know, it's incredibly hard

00:09:21   to get steel ones for a long time.

00:09:23   But now I think they're getting the mix figured out.

00:09:25   So if they have the mix figured out, that eliminates that.

00:09:28   And now you are looking at, yeah,

00:09:31   they're just having a hard time keeping up with it,

00:09:33   which theoretically should be a good thing.

00:09:36   On the flip side, they aren't keeping up with it,

00:09:38   so they're not selling as many as they could,

00:09:39   which is not great for your shareholders

00:09:42   or whatever you wanna call it.

00:09:43   - With iPhone sales rebounding

00:09:47   and actually growing and breaking a record,

00:09:49   even with that, even saying it's a record,

00:09:54   it's clear, it's a few fractions of a percentage.

00:09:59   I think at 78 million they sold into one two years ago

00:10:02   that was the previous record was like 74 million phones

00:10:05   or something like that.

00:10:06   So the years of rah-rah 50% growth year over year are over.

00:10:11   And I think that common sense would tell you why.

00:10:15   It's because the smartphone is sort of a saturated product.

00:10:19   I mean, not that there's no room for growth

00:10:22   in certain markets, but for the most part,

00:10:24   over the last 10 years, we've reached the point

00:10:26   where almost everybody who might get a smartphone

00:10:30   has a smartphone.

00:10:31   - Right.

00:10:34   Well, I mean, I think,

00:10:35   it looks like there was some declines in China,

00:10:39   but every other market grew,

00:10:41   which is, that's pretty solid.

00:10:45   I mean, China is its own beast.

00:10:47   You know, it's incredibly difficult to do business there,

00:10:49   as Apple has found over the years, you know,

00:10:51   and we only know the public stuff.

00:10:53   We don't know the many challenges they've come up,

00:10:56   against with the government and everything else that don't quite make it to the page.

00:11:01   But outside of that, every other region was growing. And I think that people think of

00:11:06   saturation and replacement cycles and things like that. The people that do think of those

00:11:12   things are not, they're not communicating it well or I should say that they communicate

00:11:17   it fine in their vein. But it's hard to characterize those things and turn them into very human,

00:11:26   you know, sentences or ideas or concepts for people that can help them understand where

00:11:32   the growth is coming from and where the sustained growth will come from.

00:11:35   Because it's like you could say, "Hey, every X years, people are going to replace their

00:11:40   iPhone and that changes based on major design changes, right?"

00:11:44   So in a major design change year, the replacement cycle may be lowered by 30%.

00:11:49   And then you can also go to like, you know, there's new people being born, so people are

00:11:53   are turning what, 12 or 13 or 14 now,

00:11:57   that were just born when the iPhone came out

00:12:02   and they're getting phones.

00:12:03   So we're getting into the first wave of,

00:12:06   I don't know, new iPhone consumers,

00:12:09   first generation of new iPhone consumers.

00:12:11   So there are lots of factors.

00:12:12   It's a very liquid thing.

00:12:14   And everybody treats it like,

00:12:15   oh yeah, everybody that has a phone,

00:12:18   has one, wants one, and that's it.

00:12:20   But I think Apple is looking at growth

00:12:21   in terms of all of these variables,

00:12:24   and the projections show, revenue projection,

00:12:27   guidance-wise, it's like 51, I guess,

00:12:30   to 53 billion, something like that,

00:12:32   that they're projecting, which is not crazy high,

00:12:35   but not light by any means, and so I think that,

00:12:39   I think that they feel that they've got the growth

00:12:41   out there, in those pockets.

00:12:43   - And I think that, I think a lot of people saw,

00:12:50   Long story short, last year for the calendar year,

00:12:54   iPhone sales were down year over year.

00:12:56   The 6S seemingly didn't sell as,

00:12:59   or didn't sell as well as the 6.

00:13:02   And I say that, my only hesitation in saying that

00:13:05   is my presumption that most iPhones sold are the new,

00:13:09   the top of the line new model.

00:13:12   'Cause you don't know, they don't break that down

00:13:14   for competitive reasons.

00:13:15   So in theory, they could've sold,

00:13:17   the iPhone SE could secretly be the best selling iPhone.

00:13:20   But anecdotally, it certainly seems

00:13:23   that that doesn't seem the way,

00:13:25   most people buy the best one.

00:13:28   I think some people saw last year's slight dip

00:13:32   and thought whether it was just to be dramatic

00:13:36   and make clickbait predictions,

00:13:39   but saw it as the beginning of a trend

00:13:42   as opposed to the counter argument was just that

00:13:46   it looked like a dip because the six was such an outlier

00:13:50   in terms of there having been so much pent up demand

00:13:53   for a quote unquote bigger iPhone.

00:13:55   And I think the numbers they just announced

00:14:01   for the iPhone 7 certainly back that up.

00:14:03   That it was just an outlier.

00:14:06   - Yeah, I think so.

00:14:07   I mean, I think the plus, I guess Tim said on the call

00:14:10   that the iPhone 7 Plus was the highest portion,

00:14:14   was a higher portion of the mix than in the past.

00:14:17   So that, you know, people are getting acclimated

00:14:20   to the larger phones, that increases their profit margins,

00:14:23   obviously, 'cause the larger phones don't cost them,

00:14:26   you know, whatever percent larger, whatever percent more

00:14:29   to make, and increases their ASP, their average selling

00:14:32   price, which is always a guidance point that like,

00:14:35   analysts love to look at, because it means that for every,

00:14:39   every amount of, ounce of effort they put into marketing,

00:14:41   or whatever the case may be, the return is higher,

00:14:45   'cause you've got that individual unit

00:14:46   that's a higher price, and it really costs you

00:14:49   roughly the same amount to sell that

00:14:51   as it does anything else.

00:14:53   It's like growing a tall tree versus a short tree.

00:14:55   I mean, they're both trees, right?

00:14:57   So there's a definite positivity around that

00:15:02   that I've been seeing, that the bigger phones,

00:15:05   people are loving them, they're taking them up,

00:15:07   and they're buying more of them than ever.

00:15:10   It is interesting and I think Apple is pretty good at this stuff, but it's always interesting

00:15:17   to see them admit that their estimates were off.

00:15:21   And it's like you said, that they've admitted that the mix of the Plus to the non-Plus 7,

00:15:27   even though the regular iPhone 7, they said, was the best-selling model, the Plus sold

00:15:32   better this year than it has, I guess, in the previous two years.

00:15:35   And that's the highest mix of them, you know, then versus the other right?

00:15:40   Makes me wonder in particular if the the the camera in particular

00:15:46   I mean, it's gotta be right

00:15:49   I mean, yeah sure part of it is just getting used to bigger size

00:15:52   But the camera has to drive like X percent of it. Like I'm not I'm not pulling out a number

00:15:56   Let's say 30% of the decisions to buy that phone where oh, it's got the better camera. So let's get that one, right?

00:16:03   - Yeah, and it seems like something that

00:16:06   you can see it when you're in the store.

00:16:10   Like if you go in the store and you're on the fence

00:16:12   over whether to get an iPhone 7 or 7 Plus,

00:16:15   starting this year, you can tell just by looking,

00:16:18   without even trying the camera, it looks different, right?

00:16:21   It's double the size.

00:16:22   It looks like, you know, you can see that it has,

00:16:26   like the previous years, the Plus models

00:16:28   had the optical image stabilization.

00:16:30   Starting with the 6, it was for stills,

00:16:33   and then the success added it for video.

00:16:37   That's a great feature, especially for video.

00:16:41   I mean, it's almost unbelievable how good

00:16:45   some of my little home family videos come out now

00:16:48   because of image stabilization on video.

00:16:51   But you can't see it in the store,

00:16:56   so it's just a bullet point, and everybody is, I think,

00:17:01   you build up an immunity to bullet points

00:17:04   because every time you buy anything,

00:17:05   whether it's a car or a toaster oven,

00:17:09   everything has bullet points.

00:17:11   Here's the features that your coffee maker has.

00:17:14   12 cups has an alarm.

00:17:17   - Makes coffee. - Right, makes coffee.

00:17:19   Whereas you just look at the back of the 7 Plus

00:17:25   and the idea that the camera is better on this one

00:17:29   than the smaller one, it seems visceral

00:17:31   because you just look at it.

00:17:32   I can't help but think that that actually successfully

00:17:35   bumped sales of this, which in turn makes me think

00:17:39   that if, you know, they may not be done,

00:17:43   this might just be the start of the bigger,

00:17:46   more expensive iPhone having tangibly better

00:17:49   camera technology, just because it seems like it's proof

00:17:53   that it can drive sales.

00:17:54   - I think you're right.

00:17:56   There are two things that I think are really driving this.

00:18:00   I'm 100% agree that the difference could actually,

00:18:03   the physical difference, the way it looks,

00:18:05   could definitely make a big difference.

00:18:08   You're right on there.

00:18:09   I know there will be people that listen to this

00:18:12   and they'll laugh, they'll be like, oh yeah,

00:18:14   people are just looking at the back of it

00:18:15   and going, oh yeah, this one's bigger,

00:18:17   got a bigger camera thingy on it and I'm gonna buy that.

00:18:20   But I think people would be shocked,

00:18:23   especially people that listen to this show,

00:18:24   which the subset of people that are in the world

00:18:27   listed to the show. You know, how much higher technical savvy than average, probably do

00:18:33   a lot more research on products than average. You know, if you were doing a demographic

00:18:37   survey, I think that none of these things would be surprising, right? But I think people

00:18:41   underestimate very heavily how little research people do when they go to buy stuff in a store.

00:18:46   Like they'll go to the store to get a phone, not having looked at a single thing online

00:18:50   or asked anybody or whatever, and they'll just go and they'll just like, "I want the

00:18:55   the best along X or Y personal axis, you know?

00:19:00   Best camera or most storage or whatever, honestly,

00:19:03   whatever most recent problem they had

00:19:05   is probably how they pick.

00:19:07   And I've seen this myself, I used to work in big box retail

00:19:10   and I've sold a lot of different things over the years

00:19:13   but one of the times I was selling digital cameras,

00:19:17   especially, this was like early,

00:19:19   in the early digital camera days, very early.

00:19:21   And somebody comes in and is looking like a Mavica,

00:19:24   like a Sony Mavica, which is one of the ones that took the floppy disks. You would throw

00:19:28   those in there. And you know, they, honestly, nine times out of ten all they want is which

00:19:34   one has the biggest number on the box. They would literally look at the boxes and they

00:19:38   go, "Oh, this one has ten, that one has eight." And you're like, "Well, yes, but the one that's

00:19:42   -- I mean, if you're an honest person, you go, "The one that's eight that's slightly

00:19:46   less is actually better for you because, I don't know, it has this swivel thing and you

00:19:50   really need that for whatever you're doing. But if you don't have that person there, that

00:19:55   decision is getting made based on the number on the box, right? Hey, that's 10. This one's

00:19:59   8. I'll get the 10, right? I have the money. That's fine. Let's go. And I think that people

00:20:04   make those decisions that way a lot more than most people think. And even though Apple store

00:20:10   employees are theoretically better informed than your average big box retailer, they don't

00:20:15   have the time. Apple stores are more crowded than ever. People are making decisions without

00:20:19   intervention by an employee and just asking the employee to set it up for them.

00:20:23   And hopefully the employee maybe intervenes at some point if they feel

00:20:26   it's the wrong product for them and tries to switch them to something that

00:20:29   is, but there's no guarantees. So I think that literally the physical difference

00:20:34   in the camera could make a real big difference for people because of those

00:20:38   reasons. And it seems silly or obvious or whatever, but people are silly

00:20:45   and obvious when they buy.

00:20:46   You know, that's just,

00:20:48   the vast majority of consumers are that way.

00:20:51   - And I think it's also telling how long

00:20:53   Apple has stuck with the shot on iPhone ad campaign.

00:20:58   You know, and Schiller said it when he was on my show,

00:21:02   I forget if it was last year or the first time,

00:21:05   two years ago, where I think it was--

00:21:07   - It's a name drop, I like it.

00:21:09   - But I asked him, like, I think it was two years ago,

00:21:12   'cause I think last year it was so obvious

00:21:14   it was too late to ask, but I just said,

00:21:16   do you consider Apple one of the leading camera companies

00:21:21   in the world, and his answer was the leading camera company

00:21:24   in the world.

00:21:25   I mean, it's totally how he sees the importance

00:21:28   of the camera on the phone.

00:21:31   And I really, there's no other explanation I can think of

00:21:33   for why the mix of plus to non-plus would grow up this year.

00:21:38   'Cause one of the big complaints about the iPhone 7

00:21:40   is that it quote-unquote looks just like the iPhone 6

00:21:43   and success that it's otherwise,

00:21:44   I just, it just seems like obvious.

00:21:49   - Yeah, and it's a great lever to get people

00:21:55   to buy that bigger phone even though they don't want

00:21:58   the bigger screen, you know, because people are often

00:22:00   just shocked by how large it is physically

00:22:03   when they hold it.

00:22:04   You know, if I hand somebody, I have a seven now,

00:22:06   but like I often use a seven plus,

00:22:09   especially when I'm traveling,

00:22:10   and so if I hand it to somebody, they're,

00:22:11   oh man, this is big.

00:22:12   if they've never used one or held one.

00:22:14   But it's a testament to how driven by camera people are

00:22:20   when they'll put up with that, so to speak.

00:22:23   And knowing how hard the camera team at Apple

00:22:28   had to push to make this thing even work,

00:22:32   the dual camera thing,

00:22:34   which is fairly, it's a really significant

00:22:36   technical achievement.

00:22:38   And if some other company had done this,

00:22:41   I mean Apple, they toot their own horn a lot, right?

00:22:44   But if some other company had done this,

00:22:46   they would have tooted it 10 times as much.

00:22:49   'Cause it's actually a very, very, very, very difficult

00:22:51   technical problem that they achieved here.

00:22:53   And out of everything in the camera,

00:22:55   or excuse me, out of everything in the phone,

00:23:01   the camera is really the only thing

00:23:03   that's pushing the processor to its limits,

00:23:07   to its absolute peak limits right now.

00:23:10   You know, I mean, a game or whatever the case may be, they know what the limits are and

00:23:14   they work within those. But most games on average that people play aren't really pushing

00:23:19   that hard. Games is probably the number two category. But above that and far above anything

00:23:25   else that most people do on their phones or most of the capabilities of the phone, which

00:23:29   are pretty well known by now, the camera in that 7 Plus with its dual lens and twin capture

00:23:37   and blending of the pair of photos and all of the stuff that it does, it really is pushing

00:23:43   very, very hard that A-Series chip. So it's like a leading driver of the power, the chip

00:23:50   power that's in the phone because that chip does and has done everything it needs to do

00:23:56   for most people for a very long time, you know, for several generations. And so it's

00:24:01   driving forward the processing capability and power of the phone and I think it's,

00:24:06   you know, driving sales along with it.

00:24:08   - And it was clearly instrumental in the portrait mode,

00:24:13   or is, you know, like why, you know,

00:24:16   why did portrait mode and the dual mode thing

00:24:19   ship this year?

00:24:20   I mean, part of it was, I think,

00:24:22   that the camera engineering, just the camera itself,

00:24:24   it took a long time.

00:24:26   I think it's complicated, and just the algorithm

00:24:30   of how are you going to use these two lenses

00:24:33   for zooming and et cetera, et cetera.

00:24:36   But I think another part of it too

00:24:38   was that it was coincident with the A-series chip

00:24:41   getting fast enough that you can do this on the fly.

00:24:43   - From what I know about how long it took them

00:24:46   to build this, and obviously everybody knows

00:24:49   that it didn't ship with the phone, right?

00:24:51   It shipped several weeks later.

00:24:53   I don't think that was strategic.

00:24:55   I think it was necessary.

00:24:57   It was absolutely necessary for them

00:24:59   to actually make it work, like finish it,

00:25:02   and get it to work.

00:25:03   And that doesn't happen if you've been able to do it

00:25:05   for a processor generation.

00:25:07   - Right. - Like that was it.

00:25:08   - You literally, Matthew Banserino,

00:25:10   were the first person I knew who had access to it

00:25:12   'cause you got a pre-release version of it

00:25:15   at least a couple of days ahead of the beta coming out.

00:25:18   And you had like a nice little exclusive on TechCrunch

00:25:23   with adorable pictures of your daughter.

00:25:25   But they were really, well, they chose well

00:25:29   because you've got a background in photography,

00:25:32   so you're not just sitting there

00:25:33   shooting pictures of your, I don't know,

00:25:36   your desk or whatever.

00:25:38   - Yeah. - But I think you could,

00:25:40   even when it first came out and they let us use the beta,

00:25:43   there were performance problems with it

00:25:46   that have since been ironed out,

00:25:47   and now it just, there is a sort of, it just works.

00:25:50   You put it in portrait mode, the preview is live,

00:25:52   the phone doesn't get hot, and it just works.

00:25:55   - Yeah, that stuff is being iterated on as we speak.

00:25:58   Like, you and I are talking right now, it's four o'clock.

00:26:01   I'm sure the camera team is still working on updates to that thing, right?

00:26:05   Because it's a living document, you know, in terms of the way that it performs.

00:26:11   The edge detection gets better every iteration, and the blur effect gets more organic and more natural.

00:26:17   You know, they're able to push that processor via optimization, because obviously the hardware hasn't changed, right?

00:26:22   So they are able to optimize the processes further, so they're able to do more and more complex calculations on that.

00:26:27   that. But it really is bleeding edge stuff. Like there, nobody else is pushing this hard.

00:26:32   And people were very quick, you know, when I published that preview and then eventually

00:26:36   when we did the review of the phone and stuff like that, people were very quick to say,

00:26:41   "Oh, you know, well this model or that model from some other brand has been doing this

00:26:44   for years, yada, yada." It's true that other brands have done this faux blur thing, but

00:26:53   not in this way and not to this level of sophistication.

00:26:56   And to be honest, even though some of the results

00:26:58   were kind of hinky up front,

00:27:00   you know it's gonna get better

00:27:01   because they're dedicated to making it better

00:27:03   and they know this is a primary driver of purchases.

00:27:07   Whereas a lot of these other phones,

00:27:09   it was a one-off gimmick to try and sell phones that quarter

00:27:13   and really is gonna get no significant updates

00:27:15   in the future, you know?

00:27:17   And it's a shame, but nobody else is really driving

00:27:19   like that.

00:27:20   works sort of backwards, right? From like, "Oh, you know, what do we think the market

00:27:25   wants this quarter? Let's try to produce that." And then, you know, they're--I'm not saying

00:27:30   that their products are not, you know, solid or, you know, decent or whatever if they don't

00:27:35   explode. But there is a drive there to get that kind of stuff right because they know

00:27:44   that this is the thing that people want. It's not what they say they want which is more

00:27:50   megapixels or sharper images or these crude terms that they use to describe it. It's actually

00:27:56   they want their pictures to look more like pictures. And that's a really nebulous thing

00:28:00   until you sort of figure out how to define that. I think they spend a lot of time trying

00:28:04   to define that for people.

00:28:06   Yeah, I also think it is the clearest path that I can think of, because I fail in certain

00:28:14   and other forms of imagination of how can the iPhone

00:28:18   continue to get better?

00:28:19   There are some little things like the True Tone color

00:28:26   that the iPad Pro has, that would be great

00:28:29   to eventually have it on the iPhone too.

00:28:32   But I can't see the display quality-wise

00:28:38   getting radically better, so much so that it would,

00:28:40   that's why you'd get a new phone.

00:28:42   everybody is, there's rumors that are rampant

00:28:44   that the industrial design is gonna change

00:28:46   and they're gonna get rid of the head and forehead

00:28:48   and just sort of go from a top to bottom,

00:28:50   left to right, edge to edge display.

00:28:53   And visually that would be very striking.

00:28:56   If it looks super cool, then I could see that driving sales.

00:29:00   But how many, after you do that, how does it keep going?

00:29:03   Whereas the camera can continue to get better

00:29:06   every 12 months, maybe not in a radical way

00:29:09   because you run up into limits of physics,

00:29:11   but, you know, and lens optics.

00:29:14   But in a tangible way, and that if you're only,

00:29:17   if you're on like a two or three year upgrade cycle,

00:29:19   you can get a radically better camera

00:29:21   every time you upgrade to a new phone.

00:29:22   That, to me, could continue to drive sales

00:29:26   about where we are right now for the iPhone

00:29:28   for years to come.

00:29:29   - Yeah, yeah.

00:29:33   There's not much else for them to chip away at.

00:29:36   And I think there will be new opportunities

00:29:40   in other categories that may even involve the camera,

00:29:43   AR, augmented reality, or VR, whatever the case.

00:29:47   But as far as the on-device components,

00:29:51   they're pretty well along towards diminishing returns.

00:29:56   So yeah, I agree, camera's a primary driver there.

00:30:01   - All right, let me take a break here

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00:32:44   What next on the results front?

00:32:47   iPad, maybe.

00:32:49   iPad sales were 16 million last year the same quarter

00:32:53   and down to 13 million this quarter.

00:32:55   I don't know what to make of that.

00:32:59   - I don't know.

00:33:01   I mean, I think that,

00:33:02   I think we're still trying to find the replacement cycle,

00:33:10   and the bottom of it, you know, the, what do you call it?

00:33:16   The bottom of the pendulum arc.

00:33:18   - Yeah.

00:33:19   - But where it starts to swing back up

00:33:20   that people repurchase or stabilizes anyway.

00:33:23   Yeah, I don't know.

00:33:26   I mean, I think that there's two schools of thought on this.

00:33:28   I think you could argue that iPads are built really well

00:33:32   and they handle single tasks.

00:33:35   And it's sort of like you got a,

00:33:37   Apple sold a framing hammer to someone to hang pictures.

00:33:42   Right?

00:33:47   So like, you go to the hardware store,

00:33:49   There's five kinds of hammer there.

00:33:51   There's a picture hanging hammer,

00:33:54   which comes in a little plastic bubble pack,

00:33:59   and it's got a few finish nails and the hammer.

00:34:02   And it's like if you hammer anything bigger

00:34:04   than a teeny-tiny nail into plaster or whatever,

00:34:08   it just, the head falls off, right?

00:34:10   And you go all the way up the scale

00:34:12   through all the different hammers to a framing hammer.

00:34:13   And a framing hammer is a hammer that slams in

00:34:17   10-pinning nails to 2x4s or 2x6s on a construction lot, right? The framing hammer is reinforced.

00:34:24   It's got like a long tang that's really thoroughly embedded in the head. And when you swing that

00:34:30   thing, bang, it's got a waffle head so you know the nail got nice and trunk down and

00:34:36   you can see that you got your imprint on that board so you know the nail's driven all the

00:34:39   way home. And you could just wail away on that for 10 years and that hammer will last

00:34:43   right? So Apple sold people framing hammers and they're, they're hammering in picture

00:34:50   frames. So you've got, you know, a ten-year-old or five-year-old or heck even a teenager or

00:34:59   an adult who uses it to browse the web and for a variety of different apps that don't

00:35:04   really push the capabilities of the iPad in any significant way. And they're like, "This

00:35:08   this is fine, why can't I just keep using this?

00:35:11   Because that framing hammer is nowhere near its limits.

00:35:15   And so I think that there's, that's one school of thought

00:35:18   that the iPad is significantly overbuilt

00:35:21   for the tasks that most people use it for.

00:35:24   And then the other school, I think, the other side of it,

00:35:27   is Apple has not done as good of a job as it could

00:35:32   explaining to people how much they can do

00:35:34   with that framing hammer.

00:35:35   Like they haven't sold it as a framing hammer.

00:35:37   And so I think that there's definitely some interesting

00:35:40   debates to be had there.

00:35:41   I don't even know where I fall on that scale yet.

00:35:43   I'm of two minds about it,

00:35:45   but I think those are the kind of arguments

00:35:47   that people are having about where the iPad is currently.

00:35:50   And then on top of that, you have this,

00:35:52   hey, we don't know how long it's gonna be

00:35:56   before people need to or want to replace an iPad

00:35:58   that they don't break.

00:35:59   Ever since the iPad 2 or 3 or whatever,

00:36:03   iPad AR I guess you'd say, it's been pretty capable.

00:36:07   - Yeah. - So why replace it?

00:36:10   - Yeah, I think it starts with the iPad Air.

00:36:13   I feel like up until then, it was still improving rapidly.

00:36:18   I mean, the first one is the first one.

00:36:19   I mean, you know, it was, you know, wow,

00:36:22   it's a tablet that people might actually buy,

00:36:24   but it was super thick, it didn't have retina.

00:36:26   And then it got thinner, and then it got retina,

00:36:29   but the iPad 3 that had retina actually got thicker

00:36:32   than the iPad 2 that was before it,

00:36:34   and it was replaced by Apple six months after it came out,

00:36:37   which is sort of ridiculous in hindsight.

00:36:40   It just shows how far they were pushing themselves

00:36:42   to get that Retina iPad 3 out.

00:36:45   And then I really feel like it found itself

00:36:49   with the iPad Air, where they shrank the sides on the sides.

00:36:53   And the A series chips had gotten,

00:36:57   I'm sorry about that, that launched Siri again on my phone

00:37:01   by saying A series. (laughing)

00:37:05   - I'm sorry, I apologize to anybody out there who's--

00:37:07   - Hey, Siri.

00:37:09   - Hey, Dingus was activated.

00:37:11   But, and I just feel, like my working hypothesis

00:37:17   on the weird trajectory of iPad sales,

00:37:20   weird meaning it, you know, at one point

00:37:22   was like 20 million a quarter, and it was faster,

00:37:26   it was never above the iPhone,

00:37:28   but it was above the iPhone at that date since launch.

00:37:33   like the first iPad outsold the first iPhone,

00:37:36   the second iPad, iPad 2, outsold the iPhone 3G.

00:37:40   And then it came down to earth.

00:37:43   And my working theory on this is simply

00:37:46   pretty much what you said,

00:37:47   that there was this great unfilled need.

00:37:50   Steve Jobs was right, that there was this middle territory

00:37:53   for something like an iPad in people's lives,

00:37:57   and there was nothing like it, right?

00:37:58   The phones were too small,

00:38:01   And laptops are, you know, they are great for certain things, but they're impersonal

00:38:08   enough and the form factor is such that it, you know, it creates this void that the iPad

00:38:15   actually does fill.

00:38:16   But then once people got one, especially of the Air Vintage or later, that's it.

00:38:21   They don't need another one until they, you know, break the other one.

00:38:24   - Mm-hmm.

00:38:25   Yeah, I mean, if you look at it from the terms of like, hey, Steve introduces the iPad and

00:38:30   and says, "We think people are gonna love this,

00:38:32   "people need this."

00:38:33   And that was, if you ascribe to the histories of it,

00:38:38   the iPad was the goal, and the iPhone was an ancillary thing

00:38:42   that they hit on.

00:38:44   But if you go back to that, and you say,

00:38:48   you have them walk on stage and say,

00:38:50   "We think that this is going to be, you know,

00:38:53   "in 10 years or whatever," what is it now, 2010,

00:38:57   so seven years.

00:38:59   in seven years this is going to be a total of $300 million business for Apple which is

00:39:05   about what iPads are, maybe a little more now, right? People would have been like overjoyed,

00:39:10   right? $300 million, you know, there's 300 million units, excuse me, $300 million, significantly

00:39:17   more dollars. But you know, you look at the amount total that you sold and these billions

00:39:23   of dollars of, you know, business that the iPad created, you would go, "Hey, that's an

00:39:27   an entire company, more than an entire company's worth of value that you're going to create

00:39:32   for Apple and shareholders and whatever else. That is more than great. And it is only because

00:39:38   the iPhone has been so, you know, outsized popular and now we know continues to grow

00:39:47   that the iPad looks paltry in comparison. Like you're judging it--

00:39:49   And because it had those go-go early years.

00:39:51   Yeah, yeah. Exactly. Exactly.

00:39:52   Where it was--

00:39:53   - Exactly, a real ramp up, fastest selling computer,

00:39:57   or fastest selling consumer electronics device.

00:40:00   I think maybe they connect beat it for a time

00:40:02   and then it, I don't know, don't quote me.

00:40:04   But one of the fastest anyway,

00:40:06   selling consumer electronics devices of all time.

00:40:09   And it just, yeah, you look at those boom years

00:40:12   and you go, oh man, now it's going down or whatever.

00:40:16   But iPads, they still sold 13 million of those

00:40:21   in the last quarter, which is crazy.

00:40:22   - And if you had-- - It's still

00:40:23   an enormous business.

00:40:24   - And it is Apple's answer

00:40:28   to the sub-thousand dollar computer market, right?

00:40:32   Like, let's just admit that the phone is a phone,

00:40:34   and even Apple, you know, smartphone is the most important

00:40:38   device in the computer industry it's ever come up with.

00:40:41   And even Apple, I think even as much as Apple knew

00:40:44   with the 10 year ago introduction of the iPhone

00:40:46   that they had something special on their hands,

00:40:48   I think that even Apple itself was surprised at

00:40:51   just how useful a smartphone could be

00:40:53   and how much we would depend on it as our primary device.

00:40:57   If you just think of the iPad,

00:41:00   if they called it the MacPad instead of iPad

00:41:03   and you discounted it with Mac sales as PC,

00:41:07   I don't think that's a ridiculous comparison to make,

00:41:10   that there are people who are going to go drop $500

00:41:14   on a portable computer.

00:41:15   Well, they're not gonna buy a MacBook

00:41:17   because there is no system that's a $500 MacBook,

00:41:19   but they might get an iPad Pro or an iPad Air or whatever.

00:41:24   If you add up those 13 million iPad sales

00:41:31   to the Mac's five million sales,

00:41:33   that's 18 million personal computers that Apple sold

00:41:36   in the whatever price range from iPad

00:41:39   to most expensive Mac, it's pretty impressive.

00:41:44   But I do think that it's sort of gonna,

00:41:47   think it's already settled into sort of a Mac-like static number of how many million

00:41:52   they can sell a quarter.

00:41:53   Steve: You know, so the analogy, the cars and trucks analogy, where a car's a, you know,

00:42:02   lightweight computer and a truck is a desktop or whatever. I mean, people often view the

00:42:09   iPad as the car and, you know, that's--and then set the iPhone aside. But I think it's

00:42:14   It's interesting to rejigger that a little bit

00:42:16   and view the iPhone as the car.

00:42:18   The iPhone's your daily driver.

00:42:22   You name me a day, you don't touch your iPhone.

00:42:25   It's possible.

00:42:26   If you lost it, you broke it, you don't touch it.

00:42:29   Other than that, you touch it every day.

00:42:31   So that's your car.

00:42:32   The desktop stays the truck.

00:42:34   The question then is, is the iPad your utility vehicle?

00:42:40   your utility vehicle or is it your sports car? In other words, do you like take it out

00:42:48   on the weekends to get work done or do you take it out on the weekends for fun? And I

00:42:52   think that there's whatever the case, whatever side of that you come down on, I think there's

00:42:56   definitely a case to be made for the iPad as like a purpose-driven device that, I mean,

00:43:02   you know, there are whole companies built up around like Revel Systems and other things

00:43:05   that are built up around using the iPads to serve functions.

00:43:10   And a large portion of its business

00:43:14   is driven by institutional sales, right?

00:43:17   Like schools and other things that use the iPads

00:43:20   in very specific ways.

00:43:22   And I think that there's the netbook arena or whatever,

00:43:27   when you remember the netbook era in schools

00:43:29   when everybody was like,

00:43:29   "Oh, we'll just buy netbooks for the kids."

00:43:31   And those things were just so bad, like so bad.

00:43:35   - Garbage. - Yeah, garbage.

00:43:38   - Garbage.

00:43:39   It was very funny to me because,

00:43:43   I mean, my son is now in seventh grade,

00:43:45   but as a 13-year-old, he's sort of,

00:43:47   like an interesting age technology-wise

00:43:51   because when he first started going to school,

00:43:55   it was, it wasn't quite 10 years ago,

00:43:58   but 2008, nine, whatever,

00:44:02   his school had a lot of,

00:44:04   I don't know if they were called netbooks,

00:44:05   but effectively they were.

00:44:07   That's what a lot of the devices they had.

00:44:08   And all the kids knew they were junk.

00:44:11   Like, 'cause it's so funny to me

00:44:13   because I remember when I was a kid,

00:44:15   getting access to any computer in school was,

00:44:18   it was like, all of a sudden I'm pumped,

00:44:22   just pumped full of dopamine and I'm on, yes.

00:44:25   And yes, there were ones that were better than others

00:44:27   and newer than others and there were even some of the,

00:44:31   some of the classes, I mean it was so ad hoc

00:44:33   at the elementary school I went to,

00:44:35   There were, some teachers had like a TI-99-4A

00:44:38   or whatever it was called, which was a total piece of junk.

00:44:40   I mean, it ran off a literal cassette tape drive,

00:44:43   but I loved it.

00:44:44   It was just so funny to me to see first graders

00:44:47   who thought that, didn't even wanna use the netbooks

00:44:49   because they were such a piece of junk.

00:44:51   - Right, and they can, it's like they can tell.

00:44:56   They can tell, everybody can tell.

00:44:58   And if you look at the iPad that way,

00:45:01   and you look at it like, hey,

00:45:03   no matter what your, I mean, you know,

00:45:06   there are some people that can't afford any computer at all

00:45:08   and that's, you know, to be, that's a different problem

00:45:13   or different discussion to be had, right?

00:45:15   But if you can afford a computer,

00:45:18   almost nearly the first computer you could afford

00:45:20   is either a subsidized iPhone or an unsubsidized iPad, right?

00:45:24   And I think that if you, you could look at like Chromebooks

00:45:28   and a lot of those other things as sort of

00:45:30   those companies' efforts to do that,

00:45:33   lower the barrier to get somebody to using their computer/using the web in Google's case

00:45:39   using their services and using their connected, you know, their connected services that carry

00:45:44   advertising and whatever the case may be. In Apple's case, it's the same thing. It's

00:45:49   like we want people to be into the Apple ecosystem so we can teach them about how good Apple

00:45:54   could be for them and what, you know, what an Apple computer feels like versus another

00:45:58   computer and I think the iPad is a good ambassador that way. And so if it always exists, if it

00:46:04   levels out at some point, because we haven't seen any leveling out, I think that's the

00:46:09   big question marks that everybody is seeing right now. Because once the true replacement

00:46:14   cycle starts to kick in and/or Apple finds a way to revitalize it in some significant

00:46:19   way where we get a new spike that resets the bar and then it slopes downwards from there

00:46:25   as everybody adopts the new thing. Whatever the case may be, I think there will be a point

00:46:30   where it eventually levels out and we see what kind of business the iPad business actually

00:46:35   is and will be long term. And I think that business will always be characterized by its

00:46:41   ability to give people expanded computing capabilities at far less price than in a MacBook.

00:46:49   And that's what it will always be for Apple. And Apple could preach about what it could

00:46:54   be for artists and what it could be for creatives and all this other stuff and that's great.

00:46:59   Now hopefully they continue to serve those people by pushing the capabilities of the

00:47:02   device, but the vast majority of sales in the category are not that. There's not 13

00:47:08   million artists buying it for pencils. That's not the way it works.

00:47:14   Dave Asprey The number I pointed out, well one of the

00:47:16   numbers I pointed out was that just looking at revenue, last year iPad was above Mac and

00:47:24   services by like a little bit for Mac and about a billion dollars in revenue for the

00:47:29   same quarter last year. And as of this year, the numbers announced today, the Mac did $7.2

00:47:38   billion in revenue and iPad was down to $5.5 billion and services were up from $6 billion

00:47:44   to $7.2 billion. Again, I'm not a doom and gloom on iPad, but I think it just goes to

00:47:51   show how the mix of the price points that are selling at iPad are low. I think that

00:47:58   the, you know, and I think iPad Pro is a successful product, but I think it's going to be most

00:48:03   successful in years to come as it trickles down, you know, the original iPad Pros trickle

00:48:08   down to the lower price points. And I think it's clear since the Macs, like unit sales

00:48:14   are just about dead even, but the revenue was up quite a bit that the MacBook Pros,

00:48:20   new ones sold pretty well for the first quarter. And I don't even think that that, they weren't

00:48:24   even out for the whole quarter.

00:48:25   - Right. Yeah, they weren't. And when you look at that trickle-down effect, I mean,

00:48:31   you look at the iPad Pro, especially the larger one, and how much capability, I mean, easily

00:48:38   at, on par, utility-wise, at least in the specific utilities, with Cintiq, you know,

00:48:49   from Wacom that were several thousand dollars more

00:48:54   and frankly worse.

00:48:56   You know, the pencil tracking was not nearly

00:48:59   what it is on the iPad and the screen does not have

00:49:02   the color rendition and accuracy of the iPad Pro.

00:49:05   And you look at all that and you look at,

00:49:06   as that trickles down, you're gonna see those

00:49:09   pro devices being, giving people access,

00:49:15   artists and other creatives access to those capabilities

00:49:18   in ways that just were not even heard of.

00:49:21   And I think Apple doesn't get credit for that stuff

00:49:23   because people wanna see,

00:49:26   in the business and tech writing world,

00:49:28   people wanna see those results in the numbers.

00:49:31   And it's like, oh, everybody must buy that iPad Pro

00:49:35   and really drive up the sales and price

00:49:37   and stuff every quarter.

00:49:38   Whereas if you look at it in the arc of the game

00:49:41   where it's like, hey, we're shipping this now in a year,

00:49:46   it's gonna be really affordable

00:49:47   and we're gonna sell a lot more of them,

00:49:49   or a lot more of devices that have their capability,

00:49:52   whatever they're gonna call them.

00:49:54   And that arc, I think, is a very interesting one,

00:49:57   and it's hard to message, right?

00:49:59   'Cause people don't wanna hear,

00:50:02   we're putting this thing out

00:50:03   that not a lot of people are gonna buy,

00:50:05   but more people will buy later when it's affordable.

00:50:07   They wanna hear, oh, we're putting this thing out

00:50:09   that people must buy now.

00:50:10   - Yeah, yeah. - And, you know.

00:50:12   - Right. - That's it.

00:50:13   - Like anything short of an iPad

00:50:15   that makes everybody just throw their old iPad in the garbage

00:50:18   and go get in line to buy the new one is somehow a failure.

00:50:22   But it doesn't really work that way.

00:50:24   The only other thing I have from the results

00:50:27   and from the notes of the conference call that I read

00:50:30   was that Tim Cook pointed out that Apple Pay users

00:50:33   are up three X year over year.

00:50:36   So that's a really, that's a very good year for Apple Pay,

00:50:41   especially since it's what, two years old now?

00:50:43   Two and a half years old?

00:50:44   And again, that's the other thing I had in my notes that is sort of like, hey, let's

00:50:50   all remember that getting people to do something to like 2013 years, hey, you're going to

00:50:58   pay for stuff by putting your fingerprint on a phone at the register on your cell phone.

00:51:05   Sounds weird, right?

00:51:06   It's like different and it's like, I don't know.

00:51:08   I mean, I know enough about how it works.

00:51:11   'cause I understand it, that it's,

00:51:12   I actually understand that it's actually more secure

00:51:15   than using a credit card, a lot more secure,

00:51:17   if you're doing a magnetic swipe.

00:51:20   But people always have the heebie-jeebies

00:51:25   about putting their credit card into their phone

00:51:26   or something like that.

00:51:27   I mean, there are an awful lot of people

00:51:29   who spent years not buying anything at all on the web

00:51:32   because they didn't feel like they could trust it

00:51:34   because it was new and different,

00:51:36   and that's just the way humans are hooked up,

00:51:38   for the most part, that new and different is scary,

00:51:41   and therefore you wait.

00:51:42   So 3X growth in Apple Pay, I guess,

00:51:46   I didn't see the details on where exactly that is,

00:51:48   like how much of that is in the US,

00:51:50   how much of it is worldwide expansion.

00:51:52   But I feel it's one of those stories that,

00:51:55   in terms of hey, Apple hasn't done a goddamn thing

00:51:57   under Tim Cook, that that crowd conveniently overlooks.

00:52:02   That it's a really solid Tim Cook, Apple era success story.

00:52:07   >> Yeah, I mean changing user behavior on something that has to do with their wallet,

00:52:13   you know, their bank account or whatever, that's insanely hard. It's insanely hard.

00:52:18   And so it is, it is encouraging to see things like that, that theoretically, you know, could

00:52:23   be big bets. I mean, you know, when people had the inkling that they were going to get

00:52:27   into payments, you know, people saw that as a, as a very big business for them. And I

00:52:32   think it's still, you know, it already is somewhat of a business, another services category,

00:52:36   and could be a much larger business in the future, especially if Apple's able to sell

00:52:42   Apple Pay through and keep up this kind of growth. But the hurdles you have to overcome

00:52:50   when you're switching over to something like Apple Pay are crazy. You come to the counter

00:52:56   and you're going to pay with your phone and you're not quite sure where to put it and

00:53:01   you're not how far away and what part of this credit card. So I put it where the credit

00:53:06   card goes? Do I put it over the keypad? Do I put it over some weird symbol that I'm not

00:53:09   familiar with? Do I put it on this clear plastic part? And people are embarrassed. They don't

00:53:14   want to do that. First of all, there are people behind them.

00:53:17   You don't like that. I hate it.

00:53:19   It's still so early days that usually, like when I go to a place that, like I notice that

00:53:24   they've upgraded their point of sale systems and I either see the Apple Pay logo or I see

00:53:29   that little Wi-Fi looking logo that means it usually works. Apple Pay usually works

00:53:34   even if they're not officially Apple Pay yet,

00:53:37   that it just has contactless NFC payments.

00:53:42   The clerk usually has no idea.

00:53:43   They'll be like, "How are you gonna pay?"

00:53:45   And I'll say, "I'm gonna try Apple Pay."

00:53:46   And they'll say, "What's that?"

00:53:48   I mean, I've had that happen,

00:53:49   and I'm not afraid to do it because I know,

00:53:52   A, I'm not embarrassed even if it doesn't work,

00:53:56   and B, I'm not embarrassed that I might know more

00:54:00   about how this works than the clerk,

00:54:01   but somebody has to go first,

00:54:02   and people are resistant to stuff like that.

00:54:05   Here's a funny thing, this is true.

00:54:07   I forget if I've mentioned this on the show before or not,

00:54:09   but one of the places I go that just added

00:54:12   a new point of sale system that supports Apple Pay

00:54:15   are the state-run liquor stores here in Pennsylvania.

00:54:20   And theirs very consistently

00:54:24   doesn't work on the first try.

00:54:30   Every single time, I put my phone there,

00:54:32   I have my thumb on the sensor and it says,

00:54:35   "Card not valid," or something's not valid,

00:54:38   "Use card instead."

00:54:40   But if I just sit there and lift my thumb

00:54:42   and press it again, it goes ding,

00:54:44   and then I get the payment.

00:54:46   But how many people would even think to try that?

00:54:48   Like, did, and every time, every single time I do it--

00:54:51   - You. - Right.

00:54:52   I just looked at the error message and I thought,

00:54:56   well, that error message makes no sense,

00:54:57   so I'm just going to try again.

00:54:59   And I didn't ask the clerk for help or anything,

00:55:01   I just sat there, I just moved the phone away,

00:55:03   moved it back, and now every time I do it,

00:55:05   it gets, it's the same thing.

00:55:06   Anything else on earnings?

00:55:09   - Yeah, that kind of finicky-ness doesn't translate well.

00:55:12   - Yeah.

00:55:13   Anything else on earnings before we move on?

00:55:15   - Nothing ahead.

00:55:16   - All right.

00:55:17   Let me take a break then,

00:55:19   and thank our next sponsor, it's our good friends,

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00:57:03   Here's some news, and it's interesting. It's a follow-up from last week's show. I had Ben

00:57:11   Thompson on, and I mentioned an anecdote from a reader of the show, and I was a little nervous

00:57:15   bringing it up because it was like one reader who wrote me this email. But he convinced me—it

00:57:24   It really seemed like he knew what he was talking about.

00:57:27   He wasn't just spitting in the wind.

00:57:29   But he bought the new LG Ultrafine 5K display, the one

00:57:32   that Apple co-developed.

00:57:35   And it's the only retina standalone display

00:57:38   you can get from Apple right now, these LG models.

00:57:42   And he was having all sorts of problems with it.

00:57:45   And for some reason, it occurred to him to try moving it.

00:57:48   And he did.

00:57:49   And it turns out that moving it away from his Wi-Fi router

00:57:52   solved the problems.

00:57:53   And I mentioned this on the show with Ben Thompson.

00:57:55   Well, it seems like this is an actual thing.

00:57:59   Zach Hall wrote a story at 9to5Mac, first-hand story,

00:58:04   where the exact same thing happened with him,

00:58:07   where he, and the problem was so bad,

00:58:10   it was like actually crashing his MacBook.

00:58:12   He had his MacBook hooked up to the 5K display,

00:58:15   and it was like freezing his MacBook.

00:58:19   He Googled a little bit, saw some,

00:58:22   speculating about this, hey, it's near a WiFi router.

00:58:26   His was near his WiFi router, so he moved it to a different,

00:58:29   moved it away from his desk, and the problems all went away,

00:58:33   and then he contacted LG, and LG said, yeah,

00:58:35   just don't use it near a WiFi router.

00:58:37   This is crazy.

00:58:40   (laughing)

00:58:42   - Well, I mean, why would a computer

00:58:44   ever be near a WiFi router?

00:58:45   - Right, right, it's, I can't help but think,

00:58:49   especially in a home office, it's gotta be a frequent,

00:58:52   a common scenario, you know, and anybody, you know, like--

00:58:56   - Yeah, probably.

00:58:57   - Anybody who's, like, lives in, like,

00:58:59   a studio apartment or something like that,

00:59:01   I mean, you may not even be able to move it that far away.

00:59:03   You know, it's kinda crazy.

00:59:05   And it just-- - Yeah, it's insane.

00:59:09   Yeah.

00:59:11   - I mean, the gist of-- - I guess we know how,

00:59:13   exactly how closely co-developed it was now.

00:59:16   - Yeah. (laughs)

00:59:18   The gist of this display, I do not have one.

00:59:21   I have a iMac here, so I'm not, a 5K iMac,

00:59:25   so I'm not in the market for a standalone display.

00:59:27   But I saw, I've seen them in the Apple stores,

00:59:28   I saw them at the Apple event that you and I were at

00:59:31   a couple months ago.

00:59:32   And my impression, my firsthand impression

00:59:36   of just looking at it from a kick the tires perspective

00:59:39   was it's a gorgeous display in a really chintzy,

00:59:44   but at least plain looking case.

00:59:47   It doesn't, it's not an ugly, I don't think they're ugly,

00:59:50   but they're not really, it's not sexy.

00:59:52   Yeah, it's not sexy like an Apple product is.

00:59:55   So like you're like, wow, that is, I want that.

00:59:57   That is gorgeous even before you see it.

00:59:59   But the display quality is excellent.

01:00:01   And the convenience of just being able to plug in

01:00:05   USB-C, Thunderbolt, and just have it work

01:00:07   seems really great.

01:00:08   But like you said, it seems pretty clear

01:00:11   that the collaboration with Apple was not on the enclosure.

01:00:16   So the chintzy-- - No, no, yeah, exactly.

01:00:20   none of the shielding. (laughs)

01:00:21   - The chintzy feeling and looking enclosure

01:00:24   is also chintzelly shielded.

01:00:26   I'm not an expert on shielding, but it seems to me

01:00:31   like this is just emblematic of why

01:00:34   there's a practical reason beyond just wanting

01:00:37   to spend more money that a lot of us wish Apple

01:00:41   were making its own Apple-branded 5K displays.

01:00:47   - Yeah, I mean, the answers that I got with this stuff

01:00:51   when I poked around, you know, like why the heck not,

01:00:53   you know, is it's pretty much as hard as designing

01:00:58   an entire system, so why do it?

01:01:01   And it's, you know, or not why do it,

01:01:03   it's not that attitude that I got, like who cares,

01:01:06   it was more we have so many hours in the day

01:01:09   and this is like designing a new iMac,

01:01:11   so maybe we shouldn't do it this time, you know,

01:01:15   and maybe we should put our efforts elsewhere.

01:01:17   And I mean you could disagree or agree.

01:01:19   I'm not saying yea or nay to their POV,

01:01:22   but that's the input that I got.

01:01:25   And that's not through official channels or anything,

01:01:27   so this is not like a PR message.

01:01:29   It's just a matter of like, it's really hard to build that,

01:01:33   especially because of the throughput

01:01:36   that you have to have to connect it to external displays.

01:01:39   And if they wanted to do it the way

01:01:40   that they wanted to do it normally,

01:01:42   which probably would have worked close to a WiFi router,

01:01:44   it would have taken them a lot of time and money

01:01:47   and manpower to achieve.

01:01:49   I guess the money's not really the problem,

01:01:51   it's more the time and manpower.

01:01:53   Taking somebody off of Macs or off of another department

01:01:58   to work on that or hiring people in

01:02:00   and then training them up through Apple University

01:02:03   and blah, blah, blah to get to a point

01:02:05   where they are able to work on those hardware products.

01:02:08   They just felt they couldn't devote the time to it, I guess.

01:02:12   I don't know, it's a hard one.

01:02:16   Whether you want to fault them or not, I don't know.

01:02:21   And obviously some people do, but for this,

01:02:24   for which is that they have so much money,

01:02:27   how can they possibly be stretched thin on resources?

01:02:31   Now, whether that's an actual emblematic

01:02:34   of a problem in their mindset,

01:02:36   that they're still at an executive level,

01:02:38   think too much like the small company,

01:02:39   smaller company they used to be pre-iPhone,

01:02:42   or whether it's actually bad management, I don't know.

01:02:46   But it's obvious though that they are.

01:02:49   Whether that's reasonable and that's a sign

01:02:52   that for Apple to be Apple,

01:02:55   that maybe the pro argument would be for Apple to be Apple,

01:02:59   they have to continue to be like a small company

01:03:02   that focuses on a few things

01:03:04   because that's just how it works.

01:03:07   The con argument would be it's just ridiculous

01:03:10   they can't afford to put an engineering team together to do a display.

01:03:15   But it's the proof, you know, whether it should be this way or not, they are.

01:03:20   They're stretched thin.

01:03:21   And I think that the decision not to do this, it's exactly along those lines.

01:03:26   That if it's going to take us that much effort to do this, we put that effort somewhere else.

01:03:31   Right.

01:03:32   Yes.

01:03:33   And you could hammer all day on the argument that, well, they should be able to afford

01:03:38   the man hours or whatever the case. But yeah, that's the way it came down and that's why

01:03:43   these decisions were made the way they are. As far as I know, I don't know. Maybe I'm

01:03:46   wrong. But I think you reach a point where saying no becomes less about, "Oh, we're

01:03:55   not going to pursue this new fun thing." And sometimes it comes down to, "We're not

01:04:02   going to splinter ourselves in ways that make a lot of logical sense. Like it's much harder

01:04:11   to say no to the things that makes--make a ton of sense than it is to say no to the things

01:04:16   that have very obvious faults and flaws and whatever. You know, I mean, so many unknowns

01:04:22   in a project can lead you to say no. So many things that say, "Hey, you know, we're down

01:04:28   this pathway, we've spent a lot of money and whatever, those could be hard to say no to.

01:04:33   But the ones that make total sense like, "Why wouldn't Apple make an external display?"

01:04:37   Those are the ones that you're going to take the most heat over. Those are the ones that you're

01:04:42   going to hopefully have to really come to, have a come to Jesus moment on and say, "We're not making

01:04:49   them for these reasons that make a lot of sense to us and that we can't even message or, you know,

01:04:56   don't want a message externally for whatever reason.

01:05:00   If it is simply that they don't have enough people

01:05:04   to work on it, man, it's hard.

01:05:08   That's a hard thing to defend,

01:05:09   but if they don't have them, they don't have them, right?

01:05:12   What are you gonna do?

01:05:14   You can't just hire a whole new random team

01:05:16   full of random people to work on a high-profile

01:05:19   hardware release because you're gonna have the same problem

01:05:22   as the LG thing has.

01:05:23   It's gonna have some weird dumb issue.

01:05:25   I mean, as hard as Apple works on their stuff,

01:05:27   there's always some weird dumb issue

01:05:28   when they launch something, right?

01:05:29   Because this stuff is difficult, and it's very complex.

01:05:33   So if you're not gonna own that,

01:05:35   and own whatever problems you come,

01:05:37   you can't say, oh, we put our B team on this, right?

01:05:40   Or we put the noobs on it.

01:05:41   You just gotta say no.

01:05:42   - I wouldn't be surprised if Apple

01:05:46   doesn't do a standalone display, or to, you know, 4K and 5K.

01:05:51   I don't know.

01:05:54   I don't have any kind of like little birdie info

01:05:56   that yes, they're coming.

01:05:58   I have had little birdie info and other people have too

01:06:01   that there were Apple branded displays

01:06:03   in the works within Apple.

01:06:05   Whether they're still moving forward,

01:06:07   I have not heard anything, I don't know.

01:06:09   So I don't have, I can't even whisper a secret on the show

01:06:13   and say I've heard it.

01:06:14   But I know that there were and I wouldn't be surprised

01:06:19   if the story is, I mean, the one everybody seems to believe

01:06:23   right now is Apple is out of the standalone display game,

01:06:26   period, and we're never gonna have another one.

01:06:28   Possible, I would not be surprised if there never

01:06:31   is another standalone display.

01:06:32   Other than treating the iMac, buying an iMac

01:06:37   just to use as a standalone display with target display mode

01:06:40   which is kind of ridiculous, the idea that you'd buy

01:06:42   a computer you wouldn't use, but it does work.

01:06:47   - I just also beg the question, how expensive is the display

01:06:52   versus the other components in the device.

01:06:54   So if your 5K display had to be 60% as expensive

01:06:59   as a regular iMac, that's on the bubble.

01:07:02   If it's 70% as expensive, who the hell's gonna buy it?

01:07:05   So there's also that component cost angle

01:07:11   that you gotta think about.

01:07:12   - I wouldn't be surprised though if the story is simply,

01:07:15   and again, on this theme of Apple can only do so much

01:07:18   at a time and there's only so many resources for testing

01:07:21   and for even just stuff like sales

01:07:24   and training the entire retail staff

01:07:27   on product design and stuff like that.

01:07:29   I wouldn't be surprised if they're still in the works,

01:07:33   but it was so clear that it wasn't gonna be done

01:07:36   in time for October 2016,

01:07:39   when they needed to have something to sell

01:07:41   with the new MacBook Pros.

01:07:42   They needed some sort of retina display

01:07:47   that would work with USB-C and Thunderbolt 3.

01:07:51   They couldn't get that done in time.

01:07:55   LG could slap something together.

01:07:59   And so that's what they did.

01:08:00   And that maybe, but it won't,

01:08:03   I think maybe it won't come out till like a year,

01:08:05   like next year, like next October, October 2017,

01:08:09   a year later, here's the new Apple,

01:08:11   whatever they're gonna call it, 5K display.

01:08:14   - Right. - And it doesn't--

01:08:15   - It'll be hard to think that this would be

01:08:17   their ambassador forever.

01:08:18   - Right, it's really hard.

01:08:20   I know that,

01:08:21   it sounds funny, but I know John Siracusa

01:08:29   has made this point on ATP several times.

01:08:31   They're gonna make this brand new campus.

01:08:32   It's gonna be, it's all Johnny Ive approved hallways

01:08:36   and curved glass and lighting fixtures and desks.

01:08:41   They're designing their own tables and all of this.

01:08:44   And what are they gonna do?

01:08:45   with LG displays on the engineer's desk.

01:08:48   (laughing)

01:08:49   It just seems ridiculous.

01:08:51   I mean, for everybody that doesn't have an iMac.

01:08:53   - That's such a John Sirk, he's a thing.

01:08:54   - Right. - That's really funny.

01:08:55   I like it. - But it does.

01:08:57   So, other than Nellie Patel, Nellie is the one

01:09:00   who based on, like, is off the record briefing

01:09:03   at the event, said Apple said they're out of the game.

01:09:07   I was told a little bit more like what you heard,

01:09:09   which is what I asked.

01:09:12   I was like, hey, does this, I just,

01:09:14   I asked in a briefing, like, hey, is this LG display?

01:09:16   Does that mean you're not gonna make a standalone display?

01:09:18   And of course, I did not get an answer.

01:09:20   (laughs)

01:09:21   A masterful, completely prepared,

01:09:23   they were obviously rehearsed on the point.

01:09:26   Did not get a yes or no, but I got,

01:09:28   this is the display we have to show you,

01:09:30   you know, what we're selling now.

01:09:31   This is the display that will be in our stores,

01:09:34   that we'll have, you know, hooked up in a prominent space

01:09:38   in all of our retail stores, so make of that what you will.

01:09:40   And that making a standalone display today

01:09:43   with all this stuff is as complicated as making

01:09:45   a new iMac or something like that.

01:09:48   That to me doesn't say never, but it does say to me,

01:09:52   yes, you can buy the LG display now

01:09:55   if you need a new display, and we're not going to

01:09:58   come out with one in a couple of weeks

01:10:00   or a couple of months.

01:10:01   - I think it honestly, what it comes down to is

01:10:02   if it makes sense, then they will.

01:10:05   And it makes a lot of sense to me, that's all I know,

01:10:08   that they would do it one day, but that that day wasn't now,

01:10:13   and that they needed something to ship.

01:10:14   I think you're totally right on that.

01:10:15   - Yeah, it also seems to me,

01:10:16   like in terms of allocating engineering and testing

01:10:19   and all the other stuff for it,

01:10:20   it seems to me like the sort of thing

01:10:22   that they could get a lot of years out of,

01:10:23   because they have in the past

01:10:24   where they've come out with new,

01:10:26   when they called them cinema displays

01:10:27   or whatever the other product names were,

01:10:29   they sold them, they'd come out with a new one

01:10:32   and it would be great and maybe price competitive

01:10:34   with other companies based on the technology of the day.

01:10:36   And then Apple just keeps selling them at 9.99

01:10:39   as the years go on and monitors from Dell

01:10:42   and other companies improve or drop in price.

01:10:45   And Apple can keep selling it 'cause it's Apple

01:10:48   and people like to buy the Apple branded one

01:10:50   and they'll pay a premium for it

01:10:52   even if it's a couple of years old.

01:10:54   It just seems to me that they're at a place

01:10:56   with these displays where you don't need

01:11:00   more pixels per inch, they're super bright,

01:11:03   they've got amazing color, they've gotten

01:11:06   to the wide color gamut.

01:11:10   if Apple came out with it, I think I could see that they come out with one and sell it

01:11:14   unchanged for three, four, five years. I mean, three is probably, I mean, three for sure.

01:11:20   - Absolutely. I mean, the 5K is like, yeah, 5K is, it's getting close to paper resolution.

01:11:25   I mean, you know, or even above if you count color rendition. And so it's just, there's

01:11:29   not really a, there's not a lot of places to go from there. So if they make something,

01:11:36   they could squeeze many, many years out of it. And really what would change would be,

01:11:40   if there's another major change in input or output.

01:11:43   - Yeah, I think that-- - Or throughput of a connector

01:11:45   or whatever. - Yeah, I think that

01:11:46   the display itself is least likely to be the,

01:11:49   we need something to replace it,

01:11:52   it's more likely to be the connector.

01:11:54   - Yeah, it's like, oh, I can't believe this display

01:11:58   doesn't have USB 8, you know, that kind of thing.

01:12:01   (laughing)

01:12:03   - Let me take one final break here

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01:13:56   Here we go, deep breath.

01:14:00   Wish I had a stiff drink,

01:14:02   but instead I've just got fizzy water.

01:14:03   (laughing)

01:14:05   - I can't, we can't, I can't keep going,

01:14:08   I can't do this without mentioning Trump's immigration order

01:14:11   that came down last week and Silicon Valley's responses.

01:14:14   And even if you wanna play the,

01:14:16   let's not talk about politics,

01:14:18   it's way too essential to the racket that we cover.

01:14:23   It really, it hits home.

01:14:24   I mean, it's a huge deal and I don't,

01:14:30   I think it's hard to overstate how much of a reaction

01:14:35   it's already gotten from companies like Apple

01:14:37   and Google and et cetera.

01:14:40   I saw Google had a big rally.

01:14:44   - That's right, employees did.

01:14:47   I've gotten so much hate mail over this, Jon.

01:14:55   We cover politics and we cover the policies

01:15:00   that affect tech, and we always have,

01:15:02   we have for many years.

01:15:03   But we've been covering so much more of it lately

01:15:06   because so much more has been happening

01:15:08   that's related to our industry that we cover

01:15:12   and the companies that look to us for whatever reactions

01:15:17   or whatever context that they want to have.

01:15:24   And we've been writing about a significant amount

01:15:27   of these things as they relate to individual companies

01:15:29   And then also tech leaders speaking out and taking stances one way or another, pro and

01:15:35   con and well very little pro, but how far con is a good question about how many of them

01:15:41   have responded.

01:15:43   And I just get, I mean I've gotten hate mail, I mean I always get hate mail, but I've gotten

01:15:49   a lot over this.

01:15:50   And people are like, "Why are you talking about politics?

01:15:52   I don't come to you for that."

01:15:54   People accusing us of being partisan in one direction or another depending on what article

01:15:58   gets published and all this stuff. And, you know, I just ignore most of it. I may end

01:16:04   up saying something about it at some point, but the long and short of it is that this

01:16:08   is not a tech issue, it's not a politics issue, it's like a human issue. Like if you're a

01:16:15   human, you should be interested in this stuff. And to be fair to our readers, like, I'm not

01:16:21   instructing our writers and our writers are not doing it. They're not writing about stuff

01:16:25   from a pure politics standpoint. We're not politico. Like, we're not just going like,

01:16:29   "Hey, politics happened and look at politics." You know, we're definitely relating it to

01:16:33   our industry, but the tech--I mean, the stuff that he's--that he's talking about with immigration

01:16:39   and, you know, possible reduction or clamping down on H-1B visas which allow highly skilled

01:16:47   tech workers to come over here, those are incredibly germane to the tech industry. From

01:16:51   everybody from Apple to Google to Facebook and everybody else uses an enormous amount

01:16:56   of H1B workers because there are a lot of highly skilled programmers that come from

01:17:02   India, elsewhere in Asia and, you know, a wide variety of other countries that aren't

01:17:08   here because our education system has a lot of flaws. So it's an incredibly germane issue

01:17:14   and they're, you know, they're up in arms about it or, you know, up in some kind of

01:17:18   arms, depending on how closely they're colluding with the current administration.

01:17:21   Yeah, and they're doing the right thing where they've, all these big companies, the Googles,

01:17:28   Apples, Microsofts, it's inevitable with the head counts that they have that they have hundreds of

01:17:34   employees who are affected by this, that somewhere along the chain of their passport that they

01:17:40   were born in or were once or still are a citizen of one of these seven countries.

01:17:47   and might literally be out of the country right now

01:17:52   in the way that this was implemented with.

01:17:54   I just signed it and even if you're in the air right now,

01:17:57   your band is, it's great that the companies

01:18:01   have their employees' backs and are helping them,

01:18:02   but it's interesting.

01:18:05   I don't know, I don't, and I thought it was,

01:18:08   I thought Tim Cook's statement

01:18:12   could have been a little stronger.

01:18:13   Like, I'm not expecting him to lash out.

01:18:17   And I'm obviously, it's no secret that I am

01:18:20   violently, virulently against Trump,

01:18:24   and I see him as a danger and a menace, personally.

01:18:27   But even so, I totally get that Tim Cook,

01:18:30   or the CEO, anybody in a position like that, can't be.

01:18:34   Even though I would certainly suspect privately

01:18:36   that he is, based on everything we know about him,

01:18:39   and who his personal heroes are.

01:18:40   I get it.

01:18:43   And I see people on Twitter who are,

01:18:46   you know, who want him to be, you know, like a completely outspoken critic. I see how he can't,

01:18:52   but I still think his statement could have been a little bit stronger. And in terms of,

01:18:56   it's like the old adage that like when you're, you know, collaborating with people that you work

01:19:02   with, or you're in school and you're doing a crit, you criticize the work, not the person.

01:19:05   So I don't expect him to come out strongly against Trump personally, but I think he could have come

01:19:11   out a little stronger against the executive order on immigration.

01:19:18   Yeah, and you've got a variety of people. It was interesting, one thing here, here's

01:19:25   like a little inside, not super inside baseball, but inside baseball in a way. If you look

01:19:30   at the statements that were released, there was like, especially early on, there was only

01:19:35   a couple of people that went on the record and just said stuff. Said, "Hey, this is

01:19:40   and here's what I have to say about it.

01:19:42   And there were a lot of leaked memos.

01:19:44   Even Tim Cook's was not a public statement.

01:19:47   It was a quote unquote leaked memo, right?

01:19:49   Couple of publications got it.

01:19:52   We ended up getting it.

01:19:53   The origin of those memos is often debated

01:19:59   among various journalists.

01:20:00   Hey, did you get this?

01:20:01   Where did you get this?

01:20:02   And people are like, sawed off.

01:20:04   I'm not gonna tell you.

01:20:05   But where those come from is an interesting thing

01:20:09   Because a leaked memo is essentially,

01:20:11   we wanna say this, but we don't wanna make

01:20:13   a public statement about it because we're a public company

01:20:15   and this has a lot of ramifications.

01:20:17   And a statement, an on the record statement,

01:20:20   is a I feel very strongly personally about this,

01:20:23   come at me bro, right?

01:20:25   And that is a, there's a difference, right,

01:20:28   in impact, I feel.

01:20:30   And eventually, a lot of the CEOs,

01:20:32   a lot of the tech companies ended up having a,

01:20:36   some sort of public personal statement about it.

01:20:39   Satya Nadella posted on LinkedIn,

01:20:41   Mark Zuckerberg posted on Facebook, so on and so forth.

01:20:48   And those statements, I mean,

01:20:50   Sergey Brin showed up at the protest at SFO.

01:20:53   And he said, this is not a company thing,

01:20:55   I'm here as an immigrant, as a person.

01:20:57   But then of course the employee rally

01:20:59   and then Google was supportive of that,

01:21:02   about the ban or whatever you wanna call the order.

01:21:07   - Right.

01:21:09   - Semantics are being debated as we speak.

01:21:12   But that was interesting to me,

01:21:15   to view the spectrum of people who were at least,

01:21:19   I don't know if you wanna call it comfortable,

01:21:20   but felt passionately enough about it

01:21:23   to put it on the record in their own voice

01:21:25   and go out there versus the people who weren't.

01:21:27   And it could spell caution, it could spell calculation.

01:21:31   There are a lot of ways to take it.

01:21:33   It just depends on how you look at it.

01:21:34   - Yeah.

01:21:37   - One weekend.

01:21:38   - I know, it is honestly, you know, yeah.

01:21:44   I mean, there's a lot here that doesn't really feel,

01:21:47   there's a lot of it here that seems to very clearly

01:21:51   to be coming from Steve Bannon.

01:21:53   Bannon's tenure at Breitbart and the publications bent,

01:21:59   it's very clear that these are all things

01:22:02   that he feels very strongly personally about.

01:22:05   How much of those feelings that Trump shares

01:22:07   will be a very interesting historical account to read.

01:22:10   - Right.

01:22:11   - If we ever figure that out,

01:22:13   how closely their views are aligned,

01:22:15   or if Bannon is able to just push forth his views

01:22:19   and make them Trump's views.

01:22:22   But it seems very clear that these attitudes

01:22:25   towards immigration and towards a variety

01:22:27   of other government institutions

01:22:29   very strongly held by Bannon,

01:22:31   and this rapid application of the exact

01:22:36   the executive order, which Republicans were so angry

01:22:40   that Obama utilized, even though he utilized them

01:22:42   far less than say Reagan or someone else.

01:22:46   It is very interesting to see what the ramifications

01:22:51   of this very fast and loose application of these orders

01:22:55   that obviously had far less, let's put it this way,

01:22:59   it's very clear they had far less vetting

01:23:02   from the appropriate agencies

01:23:04   previous executive orders.

01:23:06   - Right.

01:23:07   - You know, from the agents, affected agencies,

01:23:08   or agencies responsible for their execution.

01:23:11   So, and this is not a politics thing,

01:23:13   this is like a logistics thing,

01:23:15   or if you're looking at the government as a business,

01:23:18   which Trump has said he does,

01:23:20   it's very interesting to see this kind of business

01:23:22   being conducted, and what the ramifications of it will be.

01:23:26   Given that we are a weekend, and we're already exhausted,

01:23:29   it is definitely going to be interesting to see

01:23:32   how people maintain their vigilance that these things are handled according to the rule of

01:23:37   law and according to appropriate procedure and process. Because fugue is a real thing,

01:23:44   you know, I mean, or fatigue is a real thing, you know, you just, at some point you can't

01:23:48   keep up.

01:23:49   It's so fatiguing that you've mispronounced it. I thought one of the most telling, we're

01:23:54   in Nunday and there's so much good writing that's going on, it's hard to keep up with

01:23:57   all of it, but one of the most telling things, I did, I actually noted this back in the campaign,

01:24:02   remember this but there were a couple you know when it was clear that the Steve Bannon was going

01:24:05   to be so or was so influential in his campaign and then after the election when he we found out that

01:24:11   the this guy won that he was going to be a top advisor um uh Trump had been a guest on Bannon's

01:24:18   radio show uh I guess it's not a podcast I think it's on some kind of actual radio network but

01:24:24   Bannon had a show uh and one of the times that Trump was on they talked about uh they were

01:24:31   talking about immigration. And Trump was, this is where they differed, where Trump was arguing more

01:24:36   or less that he wanted to make it easier for when immigrants come and go to our universities and

01:24:44   become experts in science or whatever other fields they are, that it would be better for the country

01:24:49   to figure out a way to keep them here with their newly found US expertise than to have them leave

01:24:55   again. And Bannon, you know, he was like, you agree with that, right? And Bannon's argument

01:24:59   was that there's something to the,

01:25:01   it didn't quite say it was a problem,

01:25:03   but you could tell that's where he was going,

01:25:04   that when 2/3 or 3/4 of the CEOs in Silicon Valley

01:25:07   are from Asia or South Asia, that's a problem.

01:25:12   And you know, (laughs)

01:25:14   there's no way to avoid it.

01:25:16   I mean, either you look at something and you see like

01:25:19   Sundar Pichai, who was born in India,

01:25:23   is the CEO of one of the most successful companies

01:25:27   in the history of the United States.

01:25:29   You either see that as a great success,

01:25:32   I mean, I just, there's no common ground.

01:25:34   I see this as that Sundar Pichai is proof

01:25:37   that the system works and that our country can be great.

01:25:40   And Steve Bannon holds it up as a problem

01:25:43   to be, that needs a solution.

01:25:45   And I don't know, I don't see how--

01:25:47   - Yeah, I think you referred to it as a cultural,

01:25:49   that it refers to our culture,

01:25:52   that we have to maintain a certain culture.

01:25:54   And then the question then becomes,

01:25:55   you mean white culture, right?

01:25:57   like do you mean, you mean that the European people who came over and killed off the natives,

01:26:03   like those are the folks that are the best. Excuse me. Those are the folks that are the

01:26:07   best and those, that's the culture we need to maintain. And you know, I mean I think

01:26:13   that you have to take that stuff at face value. And I think that was, I think you wrote something

01:26:19   about this but, you know, everybody that was saying, even Peter Thiel said this, nobody

01:26:24   really believed him at the time, but it really looks pretty gross in retrospect, you know,

01:26:30   in terms of a gross miscalculation or gross dissembling of the truth. And that is that,

01:26:38   you know, you don't take him literally. Right? Don't take Trump literally. Take him at his

01:26:45   intent, not his word or whatever the, you know, saying was. But it's become very clear that you

01:26:50   have to take this stuff literally. So if you look at statements like that, you go, okay,

01:26:54   well, you know, if this person's, you know, policies or whatever are enacted, then, you

01:27:01   know, their goal is to create a safe space for white people in America and then to, you

01:27:08   know, destroy as much of the current government establishment as possible because they view

01:27:16   it as corrupt or unnecessary. Because he says he views himself as a Leninist or whatever.

01:27:22   And he'd like to, this is Bannon, like to tear down as much of the existing government as possible.

01:27:29   So you look at things like that and you can look at them, hey, you know, oh, I'm intellectually

01:27:33   curious about what this person's views are and, you know, where this gentleman is coming from.

01:27:37   And then you can look at the stuff that's happened in the last week and you can go,

01:27:42   "Oh, maybe I should take this as a statement of fact,

01:27:45   "and not a statement of philosophy or game theory."

01:27:50   And I think that that is a very scary proposition.

01:27:54   - I have a theory on that front.

01:27:57   And it is as much a hope as a,

01:28:01   well, I can't prove it, but it's certainly what I hope

01:28:05   in terms of the sustainability of this administration.

01:28:10   It's a fact that according to polls,

01:28:12   he is the least popular incoming president

01:28:15   in modern history, meaning in the history

01:28:18   of the Gallup poll and modern polling technology.

01:28:20   And with just about every previous,

01:28:24   or in fact, not just about,

01:28:25   with every previous elected new president,

01:28:28   there is this grace period after the election

01:28:32   where as soon as the election's over, here's the winner,

01:28:36   congratulations, and the campaigning stops,

01:28:39   there is a groundswell of support

01:28:41   and their popularity grows.

01:28:43   They enter office with an approval rating that is higher.

01:28:46   This was true for Reagan, this was true for Carter,

01:28:50   Bill Clinton, George W. Bush, George H.W. Bush.

01:28:55   It's always been true and it's not true with Trump.

01:28:58   Trump's popularity and approvals went down

01:29:00   between the election and starting.

01:29:02   And amazingly, his Gallup approval rating went down

01:29:07   eight points in his first week as president,

01:29:09   which just doesn't happen.

01:29:11   And again, I don't know, but I've probably lost everybody,

01:29:15   anybody who was listening who was a Trump supporter,

01:29:19   but I think I lost 'em a while ago.

01:29:22   But here's the hope for someone who's opposed to Trump,

01:29:24   is my theory is that Trump had a coalition of voters

01:29:29   who half of them, let's say roughly,

01:29:33   loved every literal word he said.

01:29:36   They wanted to lock her up, they wanted to build a wall,

01:29:38   they wanted to make Mexico pay for the wall

01:29:41   that they didn't want.

01:29:42   They wanted to ban Muslims from the country.

01:29:46   And then the other half were the Peter Thiel type,

01:29:49   and which is why I wrote about it, which is the,

01:29:52   you can't take this guy literally.

01:29:54   He says these things 'cause they sound good,

01:29:56   he's a showman, he's not gonna do any of this stuff.

01:29:59   Just think of the vague intent, you know,

01:30:02   Thiel's description, and it's so funny

01:30:04   that he picked up on the ban the Muslims was that,

01:30:09   oh yeah, he just says that, but what he really means

01:30:11   is they're gonna have a sane,

01:30:13   they're just gonna have a saner, smarter immigration policy.

01:30:15   Well, this immigration policy is insane,

01:30:18   and it's not smarter.

01:30:19   It's poorly written, it's hard to execute.

01:30:22   I think what's happening with Trump's approval

01:30:24   is that the people, the only people he's gonna be left with

01:30:27   are the group that wanted him to be taken literally,

01:30:29   and that the group who didn't wanna take him literally

01:30:32   and just assumed that he wouldn't are a jumping ship,

01:30:35   because now they see that he actually is doing these things.

01:30:38   And I don't think that there's widespread support for them.

01:30:41   - Yeah, yeah, it is, I mean, there's like a couple of,

01:30:49   there's a couple of accounts on Twitter

01:30:51   sort of collating regretful Trump voters,

01:30:55   who, you know, are expressing their,

01:30:58   there's one today that's, you know, hundreds of tweets long,

01:31:02   sort of before and after tweets. The first it's like clipping the, I'm afraid I don't

01:31:07   remember the account right now, but they're clipping the before tweet, you know, when

01:31:11   they're like, "Oh, Trump is going to X and Y and, you know, trust him." And then the

01:31:16   after where it's like, "He's not going to do this at all. I'm not, now I'm not going

01:31:19   to have healthcare or whatever." And I think that there is, there's a schadenfreude in

01:31:23   that but there's also like, when people say you have to see the other side and or, you

01:31:31   know, cross borders to make that. It always seems like it's always one side having to

01:31:35   cross those borders. But I honestly think there's opportunity there to not be like Nelson

01:31:41   Haha and be like, "Look, you were fooled. Now let's fix it." Right? And unfortunately,

01:31:50   you know, for many people, unfortunately for especially for people who are very solidly

01:31:54   were very solidly Hillary Clinton supporters or whatever, fixing it is going to end up

01:32:00   with Pence in power. I mean the worst case scenario is that, you know, for those folks

01:32:04   is definitely Bannon stays in power and implements his true strategy, which he laid out very

01:32:10   explicitly and you have to believe he wants those things because he's, you know, written

01:32:16   and influenced all of the other stuff so far that's matched up one for one. And so that's

01:32:22   your worst case scenario. But your best case scenario is Pence, which, you know, Pence

01:32:27   does not share liberal values at all, right? I mean, he's very far right. You would consider

01:32:33   him one of the farthest right if it wasn't for the Bannon-Trump conglomerate, right?

01:32:41   So yeah, it's gonna be a rough four years, I think, for anybody. Well, rough two, maybe,

01:32:46   if this groundswell of disapproval and/or, you know, activity or activism is able to

01:32:56   to carry for two years, you get into the midterm elections

01:33:01   and maybe the checks and balances are back in place

01:33:05   where some sort of middle ground is found

01:33:07   between the two halves of the country.

01:33:09   Literally almost two halves of the voting public, right?

01:33:12   So it's definitely, it's at times like this

01:33:17   where you realize just how important

01:33:20   to the balance of the force, so to speak,

01:33:24   those checks and balances are.

01:33:25   when they're not there anymore,

01:33:27   it's a very sudden cold bath.

01:33:29   - Yep, and I don't think we're at the end of it

01:33:33   and in terms of issues that'll just pop up,

01:33:35   unexpectedly, that draw the industry

01:33:41   that we cover into it directly.

01:33:44   I mean, there's gonna be something.

01:33:45   I mean, for example, I mean, Trump was harping about it

01:33:48   a year ago with the San Bernardino case

01:33:50   and Apple's studied refusal to give the FBI,

01:33:55   not to go down that whole story again,

01:33:58   but they didn't wanna give them an OS to unlock the phone,

01:34:02   and it's gonna be a little different

01:34:04   when Trump is the president instead of just the candidate,

01:34:07   and he's fighting back against it.

01:34:09   So I'm sure we'll go down that path again.

01:34:11   - Yeah, I mean, cybersecurity is the next big thing,

01:34:15   so we'll see.

01:34:16   - All right, briefly, 'cause I know we've gone for a while.

01:34:18   - Oh, but Giuliani's in charge, so we're fine.

01:34:19   - One last thing I just wanted to touch on.

01:34:22   I don't know how many years now you've been going,

01:34:25   but last week you were at Sundance in Utah.

01:34:27   - Yeah, mm-hmm.

01:34:29   - And so tell me about it.

01:34:33   Tell me, it seems like you really

01:34:35   have a good time out there.

01:34:37   - Yeah, so I haven't been going as long as some folks.

01:34:40   I mean, obviously it's been going on for decades,

01:34:42   but I started going in 2013,

01:34:49   2012, 2013, somewhere in there. So for a few years now I've been going every year and I

01:34:54   like it a lot. I mean it's, you know, I like everything about it. There's, you go to this

01:34:59   town in Utah, Park City, which is, this, uh, it covers Salt Lake City, Park City, and a

01:35:06   couple of other small venues like Robert Redford's house and personal screening room and some

01:35:11   other things. He's got a whole conclave up there. The dude basically just owns this whole

01:35:18   town. It's really funny. But it's a, you go, it's in the snow. There's nothing else to

01:35:26   do but watch movies and eat. You're kind of locked in. I mean, you could ski and stuff.

01:35:32   I never do. I always tell myself, "Oh, I'm going to take an afternoon or whatever." But

01:35:36   there always seems to be something to see or something to do. But you go and you're

01:35:41   snow locked in this little town. Everybody there is there to see movies. There are like

01:35:48   60, 70 movies that play every day across all the venues. You can only see three or four

01:35:53   of them a day. I mean, that's if you pack them in.

01:35:54   Right?

01:35:55   How do you decide? How do you, I mean, what do you do? Do you get like a, is there just

01:35:58   like a, here you get like a pass and here's a list of all the movies and you just go through

01:36:03   and pick them?

01:36:04   Yeah, it's different for pass holders. So if you're a pass holder, you buy a package

01:36:09   which gives you access to certain kinds of tickets and so many tickets a day or whatever

01:36:13   the case, right? And you know, those past holders get some nice perks like they get

01:36:17   to go in and get seated first in the theater and whatnot. But I go as press because I do

01:36:21   cover a variety of things. Like last year, for instance, the documentary that Werner

01:36:27   Herzog, documentary on the Internet, you know, and the kind of impact of the Internet was

01:36:33   showing there. So I got to interview him and wrote about that for TechCrunch. And so, when

01:36:38   I can, they've more and more stuff there is interactive with VR and AR versus just films.

01:36:44   So when I go, I always find something to write about for TechCrunch and it's fun to go as

01:36:50   press because you get, you sign up, you get your press pass. Your press pass allows you

01:36:55   to see any press screening. They have essentially one for theater multiplex where it runs press

01:37:01   PNI screenings all day. So press in industry. So you can go to any of those, just get in

01:37:05   line and go in and watch those. And then you can also wait list for any movie throughout

01:37:11   the day. Wait listing is essentially they have a little app and when the waitlist thing

01:37:16   turns on, you hit go and it assigns you a number. And so the overflow seating which

01:37:20   they have between 40 and 100 to 200 seats on every theater assigned to the waitlist,

01:37:25   you could possibly get in if you don't have a ticket. You buy your ticket for $20, each

01:37:30   movie ticket is $20 and then you go in and see this movie that nobody's ever seen. So

01:37:34   So it's kind of a good deal for like local residents and folks that don't have ticket

01:37:38   packages.

01:37:39   But for the press, you sign up, you get your press pass which allows you to do all that.

01:37:43   Then you get 10 free complimentary tickets over the course of the show and then you can

01:37:47   request between one and two tickets every day via the press office in the morning.

01:37:52   So everybody rushes down and says, "Oh, I'm trying to see this or that."

01:37:55   And they sell out of those tickets once they sell out and that's it.

01:37:58   So in general, like this last time, I don't have my stubs in front of me to count, but

01:38:02   but I think I saw, I got there Thursday

01:38:05   and left Tuesday morning, it was a short trip for me,

01:38:08   and I saw I think 20 movies in that space of time,

01:38:11   and then a bunch of VR exhibits.

01:38:13   So, I mean, you pack it in, you're there,

01:38:15   you might as well, I mean, I do anyway.

01:38:18   Different people handle it differently.

01:38:19   The film journalists usually stay there

01:38:21   for a week or even two, because it runs two weeks,

01:38:26   and that second week is, or second weekend/week is great,

01:38:30   because nobody's there.

01:38:31   I've gone in the second week some years and it's purely about the movies. The stars have

01:38:38   all left to go back to their lives or wherever. The first week, every show you go to, the

01:38:44   director or the actors or everybody involved is there. You get to see it essentially with

01:38:50   the people that made the movie, including down to the grips and camera guys or whoever

01:38:54   else came. And then there's Q&As after every movie. So you get to talk to the filmmakers

01:39:00   about their motivations and all that stuff,

01:39:03   person to person right there.

01:39:04   So it's pretty fun.

01:39:05   - What was the best movie that you saw?

01:39:08   Can you pick one?

01:39:09   Do you have a handful?

01:39:11   - Yeah, I'm gonna write about it too.

01:39:13   Yeah, yeah, there's a couple that I found really good.

01:39:15   I mean, there's a couple that are non-tech related

01:39:17   that I saw while I was there.

01:39:19   The Big Sick, which is Kumail Nanjiani.

01:39:22   He wrote that with his wife about their experiences.

01:39:26   Kumail's one of the guys from Silicon Valley.

01:39:30   he plays one of the programmers. Very good. And you'll hear about this. I think Netflix

01:39:35   bought them, actually. So you should be able to watch it on Netflix. I don't know if they're

01:39:38   going to release it theatrically or directly on Netflix. But Netflix and Amazon were big,

01:39:44   enormous presences there. They bought a ton of movies. This is like, for 2013, there was

01:39:52   just like rumblings that Netflix is like poking around, like there are people here. And then

01:39:57   year after year, they got to be more and more of a presence until this year. It was like,

01:40:01   you know, they were some of the biggest purchasers at the show and they were on everybody's lips. And

01:40:07   many of the movies that premiered there had already been pre-purchased by Netflix and things

01:40:10   like that. So it's, you know, my world was colliding with Sundance's world at a rapid

01:40:17   pace over the last several years. And it's got to be, it has to be from their perspective,

01:40:21   a lower risk way because these are movies that are already made, you know, that and it, you know,

01:40:26   that you could say, look, and there's some subjectiveness

01:40:29   to it where obviously whoever it is from Netflix

01:40:32   is watching the movie and saying, yeah, this is good,

01:40:34   and making a subjective judgment that this is a good movie

01:40:38   or good enough that we should think about buying it.

01:40:40   But then once they do, the risk is so much lower

01:40:42   than backing something when it's just a screenplay,

01:40:46   and there's so much uncertainty, who are you gonna get,

01:40:49   who can you cast, is it gonna come together?

01:40:51   So it doesn't surprise me at all.

01:40:54   - Yeah, you have a sort of fixed price.

01:40:55   - Right.

01:40:56   - Right.

01:40:57   And like last, every time I go,

01:40:58   one of my favorite things to do is when I'm in line,

01:41:01   I just talk to people.

01:41:02   Because in general, these are film industry people

01:41:05   that are there.

01:41:05   I mean, they're fans too, right?

01:41:07   Just folks that wanna see movies.

01:41:09   But like I talked to Academy Award winning producers

01:41:12   that are just standing in line

01:41:13   and we just have a discussion, right?

01:41:15   Because they're waiting to see some new thing

01:41:17   and they're like, "Oh yeah, I hear it's great," or whatever.

01:41:19   And I talked to them about their next project

01:41:22   and about the industry and blah, blah, blah.

01:41:24   And I talked to buyers and producers,

01:41:28   and when they're talking about Netflix and Amazon,

01:41:31   they're talking about, I asked them,

01:41:33   "Hey, is this a challenge to you?

01:41:35   "Do you view it as an invasion or whatever?"

01:41:37   In general, the response has been very positive.

01:41:41   I mean, they're like, "Hell no.

01:41:42   "For us, it's a way to tell a filmmaker,

01:41:44   "look, you can use these people to make your next movie.

01:41:47   "In other words, sell this movie.

01:41:49   "You're not gonna be rich off of it or whatever.

01:41:52   "You're gonna make a decent deal."

01:41:54   neither Amazon and Netflix are overpaying right now for movies simply because A) they

01:41:59   have the money and B) they're sort of trying to build momentum. But they're also enabling

01:42:05   filmmakers to just boom, like sell that and then make another movie. You move on to your

01:42:12   next project and then it allows them to build a body of work. And it's just like a new plug

01:42:16   and play distributor that they're able to just go and say Netflix comes with their corpus

01:42:23   of data that says this is what we know works.

01:42:26   Amazon comes with their deep pockets and says,

01:42:28   hey, we're gonna release you theatrically.

01:42:29   Like they're different playbooks.

01:42:30   They're not just like bland entities

01:42:33   that handle things the same way.

01:42:34   They definitely distribute them very differently.

01:42:37   But new opportunities for filmmakers.

01:42:40   - Any other movies you wanna give a shout out to

01:42:42   other than The Big Sick?

01:42:43   - Yeah, Marjorie Prime.

01:42:44   I really, really liked it.

01:42:46   Marjorie Prime is a movie that stars

01:42:51   John Hamm, Gina Davis, who else?

01:42:56   Tim Robbins is in it as well.

01:43:04   So I mean like, you know, all star cast.

01:43:07   I mean it's directed by this guy named Michael Amareja,

01:43:12   I think, Amareja, I might mispronounce it.

01:43:15   He directed Hamlet, I don't remember, with Ethan Hawke.

01:43:19   - Yes, I do remember that.

01:43:20   But the movie stars Lois Smith, and Lois Smith is a very venerable actress. You have

01:43:26   seen her. You listeners out there, you have seen her in something, trust me. I don't

01:43:32   know if you remember East of Eden. She was in that. She's been in the biz a long time.

01:43:40   I think she's 85, 86 now. But she's been in tons of stuff that people have seen like

01:43:46   fried green tomatoes and Twister and, you know, True Blood and all kinds of stuff, right?

01:43:51   Pete: Yeah.

01:43:51   J

01:44:03   by the guy who they adapted the screenplay off of.

01:44:06   And she's played that character twice

01:44:08   in two runs of that play,

01:44:10   and then this director directed her

01:44:12   in this movie version of that play.

01:44:15   And she's an older woman who's losing her cognitive ability,

01:44:19   and her family purchases her an AI called the Prime.

01:44:23   And that Prime is there to talk with her

01:44:27   and to help her to keep those memory pathways active, right?

01:44:32   to help her relive her life and talk about her memories. So Jon Hamm plays her husband

01:44:40   in his younger state because that's the way she wanted to remember him. And the Prime

01:44:45   is set up to engage with her and ask her about her life and to learn. So when she talks to

01:44:50   it, it learns about her life, essentially learning to be more human and more like him.

01:44:55   But the themes, obviously the AI, you know, component of it is a huge portion of the theme.

01:45:02   themes I found absolutely just spellbinding. I mean, I was barely breathing by the end

01:45:08   of it. And it's not a very--it's not a thriller by any means. You know, it's an extremely

01:45:12   calm meditative movie that I found to be extremely well-acted, full of nuance, and addressed

01:45:19   some really, really interesting topics about AI, the way it will affect us, the way that

01:45:27   humans can sort of impart their being to AI in the future or may impart them if it ever

01:45:32   gets to that point. You know, it's very, very interesting. I highly recommend checking it

01:45:37   out when it comes out. I think maybe Netflix bought it.

01:45:39   It sounds right up my alley. I feel like we're entering a golden age as Hollywood devolves

01:45:45   into nothing but sequels to franchises and $300 million budgets and the expectation that

01:45:53   the last two-thirds of the movie is gonna be blowing up

01:45:56   a city every single time.

01:45:58   We're entering like a golden age of smaller budget,

01:46:03   what used to be called indie movies,

01:46:05   I don't know what you wanna call 'em now,

01:46:06   but outside Hollywood and outside the blockbuster mindset

01:46:10   of science fiction, and a lot of 'em,

01:46:13   I mean, and it's no surprise that people are thinking

01:46:15   about AI because it's starting to get real.

01:46:19   And it's so great, it is so refreshing to see movies

01:46:22   about AI that have gotten away from AI that goes bad

01:46:26   and takes over the planet, right?

01:46:28   - Exactly, yeah, that's what you normally see.

01:46:30   And I mean, the one thing, one thing I will say,

01:46:33   this might be an interesting to people listening,

01:46:36   is that the mood at Sundance this year,

01:46:39   I mean, like I said, I'm not claiming to be

01:46:41   some historian of Sundance, but the mood this year

01:46:44   compared to years past, because remember,

01:46:47   the inauguration was happening on that Friday

01:46:50   of the beginning of the festival.

01:46:52   And all this stuff started happening.

01:46:54   The first executive actions and stuff started being passed

01:46:59   and all this and people were realizing just how much

01:47:02   Trump was going to be the Trump he promised to be.

01:47:05   And the mood at Sundance was insane.

01:47:08   I mean, it was somber and meditative and defiant.

01:47:10   And it was artists being artists, just saying like,

01:47:15   we're not gonna give up the light, we're gonna push

01:47:17   and we're gonna tell stories and we're going to help

01:47:20   unify via those stories.

01:47:22   Redford and various programmers made comments

01:47:25   as I was sitting in screenings and things like that

01:47:28   about telling challenging and difficult stories

01:47:32   and not letting up on that.

01:47:34   It just seemed very, very interesting,

01:47:36   very unified in its emotion.

01:47:41   And then years passed, it was all over the place.

01:47:43   People have different thoughts and feelings,

01:47:45   but it seemed very, very interesting to me.

01:47:47   So it'll be interesting to see how artists and filmmakers

01:47:50   and people like that react over the next several years.

01:47:53   - Well, it's nice to talk about something

01:47:54   a little bit nicer than Trump,

01:47:57   but it inevitably came back to Trump.

01:48:00   (laughing)

01:48:02   My thanks to you for your time.

01:48:05   This was a great discussion.

01:48:07   Everybody can find you on Twitter.

01:48:10   What's your Twitter handle?

01:48:11   - Panzer.

01:48:13   - P-A-N-Z-E-R.

01:48:16   And of course, your good work as the editor at TechCrunch.

01:48:20   Keep up, keep up the good work.

01:48:21   My thanks to our sponsors this week.

01:48:23   We had Squarespace and we had Audible

01:48:27   and our new sponsor, Ministry of Supply.

01:48:33   So my thanks to them and my thanks to you.

01:48:37   Adios.

01:48:38   [ Silence ]